We recently published a list of 10 Best Falling Stocks to Invest in Right Now. In this article, we are going to take a look at where Rio Tinto Group (NYSE:RIO) stands against other best falling stocks to invest in right now.
The overall stock market has been in an uptrend, as depicted by major indices trading near all-time highs. The rally has come at the back of several key factors, including artificial intelligence frenzy and optimism about accommodative monetary policies, with the Federal Reserve cutting interest rates.
After two years of consecutive gains, valuations have gotten out of hand, with some stocks trading at levels and multiples not seen in years. The eye-watering valuations are raising concerns among value investors, constantly on the hunt for bargains. Morgan Stanley Wealth Management analysts have also fired warning shots about valuations that have gotten out of hand.
According to analysts’ expectations of earnings growth are too ambitious at a time when it is still unclear what President Donald Trump will do. “Policy uncertainty from the new administration appears underpriced. 2025 is not at all like 2017, and we view the risks as much higher,” said Lisa Shalett, chief investment officer and head of the wealth management unit’s global investment office. According to Shalett, investors are better off diversifying their portfolio by pairing investments in domestic stocks and bonds with equities outside the US.
READ ALSO: Billionaire Howard Marks’ Top 10 Stock Picks and 10 Cheap Value Stocks to Invest In, According To Seth Klarman.
While the rally in the equity markets has come on growing expectations that the US Fed will cut interest rates aggressively, it could stall as President Trump swings into action. According to UBS CEO Sergio Ermotti, the expected decline in interest rates could be stalled should Trump impose tariffs on allies.
“Something that I’ve been saying for a while, inflation is much stickier than we have been saying. The [truth] of the matter is that we need to see also how tariffs will play a role in inflation. Tariffs will probably not really help inflation to come down. And therefore I don’t see rates coming down as fast as people believe,” Ermotti said at the World Economic Forum in Davos, Switzerland.
Most stocks trading at all-time highs are enjoying premium valuations on investors betting on them amid expectations of lower interest rates. Amid the blockbuster gains, some stocks have gone the opposite way, tanking to levels not seen in years. The selloff that has come into play has given rise to undervalued stocks trading close to their 52-week lows. While the prospects of the selloff persist, stocks are also showing signs of bottoming out. Consequently, the best-falling stocks to invest in are companies backed by solid underlying fundamentals affirming their long-term prospects.
For good reason, economists are upbeat about the US economy and stock market. In the United States, GDP growth has been steady, interest rates are predicted to decline, and the incoming president is firmly pro-business. That presents a perfect environment for fallen stocks with solid fundamentals to bounce back. Since value stocks are already priced at or below their intrinsic value, they should theoretically have a lower downside risk.
Our Methodology
To make our list of the best falling stocks to invest in right now, we scanned the US stock market for stocks that have fallen significantly and are trading close to their 52-week lows (0-10% above). We then settled on the top ten fallen stocks that have the potential to bounce back. We finally ranked these stocks based on their upside potential.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Aerial view of an open pit mine, with workers extracting minerals.
Rio Tinto Group (NYSE:RIO)
52 Week Range: $57.85 – $74.24
Current Share Price: $61.12
Number of Hedge Fund Holders: 30
Stock Upside Potential: 37.12%
Rio Tinto Group (NYSE:RIO) is a basic materials company that mines and processes mineral resources worldwide. It operates through Iron Ore, Aluminum, Copper, and Minerals Segments. While the stock has been in consolidation for months, several factors affirm why it is one of the best-falling stocks to invest in right now.
A proposed merger with Glencore is one catalyst that could provide some impetus to the stock. The merger would result in one of the largest mining companies in the world with massive mineral reserves. Additionally, there have been reports that Rio Tinto Group (NYSE:RIO) plans to acquire Teck Resources as it looks to strengthen its prospects in the industry.
Donald Trump administration’s ending regulatory red tape is another factor that strengthens Rio Tinto’s long-term prospects. For once, the company could secure approval for the Resolute Mine in Arizona, allowing it access to substantial copper deposits. The mine would put the company in a strategic position to benefit from growing copper demand amid the electric vehicle revolution. A recovering Chinese economy is also expected to fuel demand for various commodities, resulting in price spikes that will benefit Rio Tinto Group (NYSE:RIO).
Overall, RIO ranks 6th on our list of best falling stocks to invest in right now. As we acknowledge the growth potential of RIO, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RIO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.