7 Best Copper Stocks to Buy According to Analysts

6. Rio Tinto Group (NYSE:RIO)

Number of Hedge Fund Investors  in Q1 2024: 37

Analyst Average Share Price Target: $83

Upside: 30.13%

Rio Tinto Group (NYSE:RIO) is one of the biggest mining companies in the world, which provides it with significant resources to rapidly invest in new projects at a time when other firms might be struggling to raise funds. Rio Tinto Group (NYSE:RIO) is also aware of the rising supply crunch in the copper industry, and on this front, it aims to increase its production to sit at one million tons by 2029. Rio Tinto Group (NYSE:RIO)’s current copper production is 700,000 tons, and to expand its output, it has entered into partnerships in Chile and grown production in Mongolia and the US. This shift comes as iron, which accounted for 80% of Rio Tinto Group (NYSE:RIO)’s operating income in 2023 is struggling worldwide due to dropping industrial activity. In fact, slow iron demand has also impacted the firm’s valuation, as it trades at 4.5x of its forward EBITDA which is lower than the sector average of 5.5x. Additionally, Rio Tinto Group (NYSE:RIO)’s aggressive approach to copper is also reflected in the value of its reserves, which currently sit at a whopping $25 billion.

Rio Tinto Group (NYSE:RIO)’s management shared key details for its copper plans during its Q1 2023 earnings call. According to them, the rise in prices helped offset the negative impact of falling aluminum prices:

Turning now to the EBITDA movement, in aggregate, commodity prices lowered EBITDA by $1.5 billion, primarily driven by aluminium. Weaker currencies in Australia and Canada offset this by about $600 million. The real positive in the period though was the 3% rise in copper equivalent production. The increase in Pilbara output was a big factor behind this growth, and added $600 million. In copper, we benefited from the Oyu Tolgoi underground ramp-up, but there was some offset at Kennecott due to a conveyor failure in the first half, and the planned rebuild of the smelter in the second and third quarters.