10 Best Aluminum and Aluminum Mining Stocks to Buy Now

7. Rio Tinto Group (NYSE:RIO)

Number of Hedge Fund Holders: 29

Rio Tinto Group (NYSE:RIO) is a global leader in aluminum production, managing a fully integrated supply chain from bauxite mining to aluminum smelting. Their aluminum is responsibly produced, and through their Matalco JV, they offer fully recycled products.

In the first half of 2024, Rio Tinto Group (NYSE:RIO) reported net sales of $26.8 billion, an increase of 1% compared to the first half of 2023. Underlying earnings increased from $5.1 billion in H1 2023 to $5.8 billion in H1 2024. Moreover, underlying EBITDA rose 3% to $12.1 billion. This favorable financial performance is attributed to significant operational efficiencies in the Aluminum and Copper divisions and the absence of one-time operational disruptions from 2023.

Moreover, cash flow from operations was maintained at $7.1 billion, and free cash flow was $2.8 billion, reflecting consistent operational performance. Regarding liquidity, Rio Tinto Group (NYSE:RIO) maintains a net debt of $5.1 billion and a return on capital employed (ROCE) of 19%, providing ample liquidity for future investments. Looking ahead, Rio Tinto plans a disciplined dividend policy with a 50% interim payout and remains focused on growth through decarbonization efforts and sustainable production technologies.

Rio Tinto Group (NYSE:RIO) has collaborated with Canada’s government, investing $179 million, as announced in July 2024. The JV plans to install the first carbon-free aluminum smelting cells at its Arvida smelter in Quebec, Canada, using ELYSIS technology to launch greenhouse gas-free aluminum production. The plant will boast ten pots running at 10 kA (kiloamperes), providing a push towards sustainable aluminum production.

In addition to the developments in aluminum sector, Rio Tinto and BYD, among other companies, are developing a lithium project in Chile, as part of the country’s push to boost lithium production. This initiative, announced in August 2024, is part of Chile’s broader strategy to enhance its position as the world’s second-largest lithium producer.

Rio Tinto’s share price experienced a decline of 2.77% over the past month and 18.39% year-to-date, due to production issues. These include a 2% decrease in iron ore production due to a train collision in Pilbara, lower copper production due to conveyor belt problems, and reduced alumina output forecasts due to gas supply issues.

Despite these setbacks, analysts remain positive about future growth, projecting an upside potential of 35.6%. As of Q2 2024, 29 hedge funds, with a combined investment of $1.3 billion, are bullish on the stock, as per Insider Monkey’s database.