Rio Tinto (update due 16 January)
London’s miners had a fantastic year, Rio Tinto among them, but investors will be asking themselves whether the rally has had its day. Much will depend on the outlook in China, and here metal prices appear to be stabilising. Crucially fears of oversupply have receded, and if the US infrastructure stimulus ramps up then demand for metals could pick up.
Rio Tinto shares are no longer the ‘dirt cheap’ bargain that prevailed in January 2016 but both fundamental investors and trend followers have reason to be positive – at 12.4 times forward earnings it is the cheapest in over a year, while the steady push higher in the share price has yet to come to an end.
If the share price continues its steady ascent then £35.30 and £36.56 should be the next targets to watch. After a good run however the price is starting to look overextended, but a sufficient dip, perhaps towards £31, should provide an interesting opportunity to add to longs or open a new position.