ArcelorMittal (ADR) (MT), BHP Billiton Limited (ADR) (BHP), Rio Tinto plc (ADR) (RIO): Massive Miners, Bargain Prices

We could all use a little RIO

Rounding off this list of massive miners currently available on the cheap is Rio Tinto plc (ADR) (NYSE:RIO). Current price levels give Rio Tinto plc (ADR) (NYSE:RIO) a dividend that, at 4%, even has a slight edge over BHP Biliton. Rio is currently being offered by the market for $58.7 billion, where should we look first to see if that price is to the advantage of us the individual buyer of securities? If you said the balance sheet, then we think alike.

Working capital sits at approximately 9.2% of market cap, in this case $5.402 billion dollars. Management has been levering up lately which, in the short term at least, will always do some damage to stockholder equity. The value of the equity of shareholders of Rio Tinto stands at $46.865 billion. One other positive takeaway I received from Rio Tinto plc (ADR) (NYSE:RIO)’s balance sheet was the direction that the number of shares outstanding was trending in. Management at Rio Tinto has done well in seeing that the number of shares their company has outstanding is not excessive.

In terms of cash generation Rio Tinto plc (ADR) (NYSE:RIO) is a beast, although not on quite the same level as BHP. Operating cash flow in 2012 was $9.368 billion dollars for Rio Tinto plc (ADR) (NYSE:RIO). It has managed to average $14.22 billion dollars in annual operating cash flow during the past 4 years. Those are fairly high amounts of cash generating power to receive for the price of $58.7 billion.

Final Foolish Thoughts

Here we have three shining examples of metallic magnificence. While neither of them are anywhere near being the perfect business, they all have their problems, right now the market is offering them for cheap. Relative to working capital and shareholders equity they are all fairly cheap, with ArcelorMittal (ADR) (NYSE:MT) being the standout there. Rio Tinto plc (ADR) (NYSE:RIO) has the highest dividend yield, presently at 4%. Last but not least, when it comes to margins and pure cash generating power, BHP Billiton Limited (ADR) (NYSE:BHP) is head and shoulders above the rest. I’m torn on which to choose, as they are all so cheaply priced. But it seems to me that the highest quality company here is, without a doubt, BHP Billiton.

The article Massive Miners, Bargain Prices originally appeared on Fool.com and is written by Ryan Palmer.

Ryan Palmer has no position in any stocks mentioned. The Motley Fool owns shares of ArcelorMittal. Ryan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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