Helal Miah, investment research analyst at The Share Centre, picks international mining company, Rio Tinto, as his share of the week.
Rio Tinto’s recent statements and planned expansion projects show it continues to focus on its core business of extracting iron ore. With recent data suggesting China may be reaching an inflection point, following a slowdown of its economy in 2012, we may see increases in iron ore prices and demand as inventory will have to be kept at minimal levels to meet any rising order levels.
The company remains convinced of the strength of the long term demand outlook, despite the short term uncertainties, and are keen to progress with major investment projects, along with cost cutting measures.
We recommend investors ‘buy’ Rio Tinto based on an improving economic environment in China and a muddle through in Europe. However, investors should continue to expect higher than normal levels of volatility in the share price for some time to come and new investors are advised to drip feed into the stock in the present environment.