By Paul Goodwin, Cabot Analyst and Editor, Cabot China & Emerging Markets Report
For Cabot Wealth Advisory, 12/10/07 Sign up for free Cabot Wealth Advisory e-newsletter
Rio Tinto (RTP) is the U.K. mining giant that sells billions of dollars worth of iron ore, copper, aluminum and other minerals every year. The company is growing fast because of demand from China and the rest of the developing world, and that growth is having some unexpected consequences.
The first is that Rio Tinto, which has been a buy-and-hold-and-bank-the-dividend stock, is now growing fast enough to put its stock into a recent Cabot Top Ten Report. Part of this growth has happened because the value of the mineral resources that the company already owns keeps on rising.
But part of the stock's advance is also the result of a proposed takeover bid by Australian mining behemoth BHP Billiton, which offered $130 billion for Rio Tinto. Rio Tinto, for its part, told BHP to take a hike, but the takeover spirit is in the air, and even a company as big as Rio Tinto (market cap $117 billion) isn't immune.
Investors smell blood in the water, and they may be bidding RTP up in anticipation of a takeover premium. But the stock has been rising on huge demand and positive fundamentals for quite a while, and may not need the added fuel of M&A activity to keep going.
RTP is one of the stocks that showed up for the first time in a recent issue of Cabot Top Ten Report, which reviews and dissects the ten hottest stocks of the previous week. For investors who enjoy doing their own research and want to find the monster stocks of tomorrow before the market does, Cabot Top Ten Report is an indispensable aid.
Paul Goodwin
Emerging Markets Specialist, Analyst and Editor of Cabot China & Emerging Markets Report
A researcher and writer for over 30 years, Paul Goodwin has been a member of the Cabot investment team and editor of
Cabot China & Emerging Markets Report since 2005. Under Paul’s stewardship, Hulbert Financial Digest rated Cabot China & Emerging Markets Report the number-one-rated newsletter of 2006 with a 78.6% gain for the year, the number-one-rated newsletter of 2007 with a 74.1% return, and the top-performing investment adivsory for five years with a 17.9% annual return.