OTCPK:NOSOF - Post by User
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surveyor2582on Aug 09, 2021 12:49pm
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Aug. 09, 2021 11:55 AM ET
Aug. 09, 2021 11:55 AM ET
Rio, BHP tick higher as J.P. Morgan turns bullish after sector weakness
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- Rio Tinto (RIO +0.8%) and BHP (BHP +0.3%) cling to modest gains even as most commodity linked stocks tilt lower, as J.P. Morgan and Citigroup release bullish notes on the mining sector,
- J.P. Morgan upgrades miners to Overweight from Neutral, saying "the valuation gap emerging relative to spot prices/earnings provides an opportunity for outperformance" after the group's recent weakness.
- High conversion of free cash flow into dividends likely will continue due to strong balance sheets, limited capital spending and low operating leverage, according to JPM's European mining, metals and steel team.
- Also, "ESG considerations will likely mean corporate strategy will err on the side of caution around growth and M&A, further limiting potential drains on excess capital," the JPM group says.
- In its own bullish note, Citi says the sector has the "potential to rerate as the underlying commodities continue to perform well and companies are stepping up cash returns to the shareholders."
- Also rated highly: OTCPK:GLCNF, OTCPK:GLNCY, OTCQX:AAUKF, OTCQX:NGLOY
- Pressured by prospects of improved supply and weakening Chinese demand, iron ore prices have been falling in recent weeks.