10 Best Undervalued UK Stocks To Buy Now

5. Rio Tinto Group (NYSE:RIO)

Number of Hedge Fund Investors: 37

Forward P/E ratio as of August 10: 8.55

Rio Tinto Group (NYSE:RIO) is a leading global mining and metals company that generates revenue by exploring, mining, and processing a variety of mineral resources and selling them to industrial customers, including manufacturers, construction firms, and energy producers. The company is known for its focus on operational efficiency and cost control by implementing advanced technologies and innovative mining practices which enhances its profitability. The company’s primary products include iron ore, aluminum, copper, diamonds, gold, energy products, and industrial minerals such as borates and titanium dioxide. Rio Tinto Group (NYSE:RIO) has a market cap of $101.90 billion as of August 10 and is one of three the largest mining companies in the world. Rio Tinto Group (NYSE:RIO) is strategically well-positioned to capitalize on the expected sustained commodity demand created by decarbonization, shifting regional industrial policies, and geopolitics. As of the first quarter, the stock is held by 37 hedge funds with stakes amounting to $1.42 billion. Fisher Asset Management owns the largest number of stocks in the company with a market worth $1.05 billion as of March 31.

Rio Tinto Group (NYSE:RIO) has been making substantial financial investments and expanding its low-carbon aluminum and iron production capabilities by acquiring strategic aluminum assets, leasing solar parks, and setting up long-term renewable energy contracts to position itself as a key player in the global low-carbon economy. On June 11, Rio Tinto Group (NYSE:RIO) agreed to acquire an 11.65% stake in Boyne Smelters Ltd. from Mitsubishi Corporation, which operates the Boyne Island aluminum smelter in Gladstone, Australia. On July 1, Rio Tinto Group (NYSE:RIO) announced a $285 million investment, in partnership with the Quebec government for the construction of a carbon-free aluminum electrolysis plant in Quebec, with an annual production capacity of 2,500 tonnes of aluminum without any direct greenhouse gas emissions. During the year 2023, Rio Tinto Group (NYSE:RIO) invested $1.1 billion to expand its “low-carbon” aluminum smelter at Complexe in Quebec, Canada. The Canadian government is supporting these efforts and has invested in the ELYSIS technology, the Quebec government also contributed around $113 million to the smelter expansion.

The stock is trading at a forward PE of 8.55, a 44% discount to its sector. Earnings per share are expected to increase by 0.6% which may not sound compelling, however, the stock trades at $63.24 as of August 10 and analysts forecast that the share price will increase by 26% and reach $83 over the next twelve months. The company has a total debt of $14.35 billion and has about $10.75 billion in cash.