Demand Drives Value

Jun 1st, 2009 – Comment

Hello, I would like to know if I should buy RTP at its current price? What is the risk with this stock? What is the future outlook for this stock for the next 6 months to 1 year? Thanks Regards, M.Patel   Hi, Rio Tinto PLC is one of the worlds largest mining companies producing […]


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Hello,

I would like to know if I should buy RTP at its current price? rtp2jpgWhat is the
risk with this stock? What is the future outlook for this stock for
the next 6 months to 1 year?

Thanks

Regards,
M.Patel

 

Hi,

Rio Tinto PLC is one of the worlds largest mining companies producing aluminum,iron ore, copper, uranium, coal, and diamonds.  When you ask about the risk associated with an investment in RTP  (NYSE)  you have to focus on the health of the global economy.

RPT moved off the March lows as investors recovered from their extreme pessimisim and increased their appetite for risk. The prime driver for the stock has been anticipation of a recovery in China and the ensuing increased demand for metals.

Last week I happened to have a casual conversation with a mining industry veteran who said that eventually we will be pulling old fridges and stoves out of landfills to harvest their metal content. Although anecdotal that conversation tells me that in the long run finding metal deposits that can be economically developed will pose a challenge.rtp1

Risk management protocols indicate that the shorter the term of an investment the higher the risk. You are interested in the outlook for RTP for a one year span which by definition introduces another layer of risk you should be aware of.

The chart for RTP indicates resistance at $180 and support at $150. If it can breakthrough $180 it could run to $250 without much to hold it back. The 50 day moving average also appears ready to cross above the 200 day moving average which also indicates continued strength in the uptrend.

If you like the Rio Tinto story and can manage the risk of a short term investment horizon then this stock is offering a reasonable entry point. Make sure to watch the $150 level for support if that fails you’ll have to cut your losses.

 

Happy Capitalism!

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