Despite cooling in October and November, inflation remains way above the Fed’s 2%-3% target range. Shares of companies exposed to commodities, such as metals and agricultural products, act as a…
natural hedge against inflation, as commodity prices tend to increase during such periods.
According to Goldman Sachs Group Inc. (GS) commodities will be the best-performing assets in 2023 and are expected to offer investors more than 40% returns. Furthermore, commodity stocks help in portfolio diversification, thereby minimizing risk.
Given the backdrop, investors might add fundamentally sound commodity stocks Rio Tinto Group (RIO), Vale S.A. (VALE), and The Mosaic Company (MOS) to their watchlist for 2023.
Rio Tinto Group (RIO)
Headquartered in London, RIO is a mining and metals company that explores for, mines, and processes mineral resources worldwide. Its segments include Iron Ore; Aluminum; Copper; and Minerals.
On December 16, 2022, RIO completed its acquisition of Turquoise Hill Resources Ltd (TRQ) for approximately $3.10 billion, simplifying its ownership of the world-class Oyu Tolgoi mine in Mongolia. This acquisition dramatically expands RIO’s copper portfolio.
RIO has paid dividends for seven consecutive years. Over the last five years, RIO’s dividend payouts have grown at a 23.65% CAGR. While RIO’s four-year average dividend yield is 10.47%, its current dividend translates to a 7.69% yield.
RIO’s non-current assets came in at $78.49 billion for the period ended June 30, 2022, compared to $78.46 billion for the period ended December 31, 2021. Also, its total liabilities came in at $44.81 billion, compared to $46.31 billion for the same period.
RIO’s Pilbara operations produced 84.30 million tonnes for the third quarter that ended September 30, 2022, up marginally year-over-year. Moreover, its mined copper came in at $138 million, up 10% year-over-year. Also, its titanium dioxide slag came in at $310 million, up 48% year-over-year.
Analysts expect RIO’s revenue and EPS to come in at $54.34 billion and $8.83, respectively, for the year ending December 2022. Over the past three months, the stock has gained 25.9% to close the last trading session at $69.43.
RIO has an overall rating of…
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