Analyst Sees Sunny Days Ahead for Rio Tinto and Mining Sector

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By Trey Thoelcke Published
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Shares of London-based mining company Rio Tinto PLC (NYSE: RIO) got a boost in premarket trading in the U.S. Monday after an analyst upgrade of the mining sector that also helped lift stocks in European trading.

J.P. Morgan upgraded the European Metals & Mining sector to Overweight from Underweight Monday. The analysts said they expect the second half of 2014 to “see the sector’s free-cash-flow improvement, capital-returns potential and attractive relative valuation begin to be appreciated more fully.”

The firm also selected Rio Tinto as its top pick in the sector and added the stock to its European Analyst Focus List. Its rating on the stock remains at Overweight. The analysts expect that Rio Tinto will see free cash improvement in the second half of 2014 as well.

Late last week, Rio Tinto CEO Sam Walsh said that the company’s miner’s business improvement program was gaining momentum. 24.7 Wall St. speculated last month that Rio Tinto might follow in the wake of competitor BHP Billiton Ltd. (NYSE: BHP) and shed underperforming assets. And the company did in fact surrender its stake in an Alaskan gold mine.

Analysts have a mean target of $62.18 on Rio Tinto, and shares ended last week at $54.31. The share price was up 3.3% in premarket trading to $55.92. Rio Tinto was also the best performer on the U.K.’s FTSE 100 index Monday.

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About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.

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