Why Rio Tinto Is a Great Value Stock Right Now

Shares of Rio Tinto Group (NYSE:RIO) have been soaring of late, for good reason. The company recently reported its strongest earnings in a decade, and announced a large special dividend for investors who have held onto this stock of late. This dividend increase bodes well for long-term investors bullish on a commodities rally. Personally, I think this commodities rally is likely only getting started, due to continued weakness in the U.S. dollar stemming from the massive stimulus that is likely to continue for some time.

Rio Tinto’s share price has increased more than 250% from its March 2020 lows, and seemingly have a tremendous runway for growth if this bull market in commodities continues. Many of the base metals Rio Tinto produces are used in the production of products supporting the electrification secular trend. If investors are bullish on the rise of EV options, renewable energy, and other key growth sectors right now, Rio Tinto represents a solid “picks and shovels” approach (literally) to those looking for exposure to electrification.

Rio Tinto’s recent earnings of $12.45 billion not only surpassed last year’s numbers of $10.37 billion by more than 20%, but also beat analysts expectations of $12.02 billion handily. I expect continued outperformance on the company’s bottom line, and expect continued dividend increases for the medium-term.

Yes, commodity bull markets do come to an end. However, with the amount of raw material needed to support an electrification trend which should last decades, there’s a solid value argument to be made with stocks like Rio Tinto today.

Invest wisely, my friends.