RIO ==> The Titans are Going to Vegas Winner!

[jiesen]

hey, welcome back, $$MM! How was Vegas?

[mrmarket]

hey, welcome back, $$MM! How was Vegas?

fun...but very expensive!

[sisterwin2]

I just jump in on RIO today at 38.86... hope your right. But with just 500$ I want more then 15%...hehehehe
dena

[Websman]

fun...but very expensive!

I couldn't make it to Vegas, but I did manage to get a couple of hours in at Harrah's Casino in Cherokee, North Carolina.

I lost a grand total of $6.95. Not bad, considering that I usually lose my ass.

[kpacnj]

Rio

Your writeup is right on. I have been in RIO since April. Your calculations may be too conservative, especially if PE goes to 20, stock price will be around $120 if China keeps going. That's a triple from today's depressed close of $39.97. However, it depends on China continuing to confound the "experts" and not go into a slump. I am banking on heated economic activity there until after the Olympics.

Why are you settling for 15% from your buy point with all the sound analysis and reasons you give for owning this stock? Even assuming you can turn your money over every 6 weeks at 15%, you're still only looking at 130% annualized. By the way, that's not too shabby if you can ever pull it off!

Still, thanks for this site, it is very enjoyable no matter what happens (almost).

kp

[mrmarket]

earnings due November 9....estimates are $1.14/share

[Dave]

I like RIO and about any other raw material-type company right now. China is sucking up raw materials like nobodies business, and with all the rebuilding going on here in the SE (hurricanes suck!), well, they are going to make a ton. We are on a year-long waiting list for concrete roof tiles. Unreal! China sucking up all that stuff too, those bastages. They used to be the worlds #1 exporter of cement, now they are the #1 importer...

Anyway, going to buy RIO, but going to wait until after tomorrows earnings report. I sold out of SNHY yesterday with a nice gain. What a relief. I really try to not hold any stock through its earnings report, but sometimes its hard not too. kind of like doubling down on a 12, you know you shouldn't, but its fun!

Dave

[Websman]

Dave, don't forget to put yourself on IIC's map. We need some more representation from our part of the country.

http://www.mrmarketishuge.com/showpost.php?p=29820&postcount=1

[Gatorman]

When is the report due?

earnings due November 9....estimates are $1.14/share

Does RIO report before or after the bell tomorrow?

[Gatorman]

Digesting the Figures

earnings due November 9....estimates are $1.14/share

Help with this and correct me if I'm wrong but it appears to me that RIO reported $1.15/share. It also seemed to me that their outlook was positive for the future.

[jiesen]

yes, you are correct, Gatorman!

from:

http://biz.yahoo.com/prnews/051109/spw005.html?.v=2

Sustaining Profitable Growth
Wednesday November 9, 6:39 pm ET

Performance of CVRD in the Third Quarter 2005 (3Q05)


RIO DE JANEIRO, Brazil, Nov. 9 /PRNewswire-FirstCall/ -- Companhia Vale do Rio Doce (NYSE: RIO - News; CVRD) has been reporting continuous good operational and financial results, breaking numerous records quarter over quarter. Past investments and significant productivity gains have resulted in record sales, which in this quarter were achieved in shipments of iron ore & pellets, potash, and railroad general cargo transportation and port services.

Most of CVRD units are operating at full capacity with every ton produced being shipped to clients.


In spite of the cost pressures arising from the economic cycle and the firm appreciation of the Brazilian Real, profit margins continue to be much higher than the historic average. Cash generation has been sufficient to finance a vast program of investments and considerable returns to shareholders, while the balance sheet has continuously strengthened.

* Shipments of iron ore and pellets in 3Q05 totaled 65.260 million tons, exceeding the previous record -- 62.386 million tons in 2Q05 -- and bringing the total for the first nine months of 2005 (9M05) to 187.442 million tons.

* Potash sales were a record 197,000 tons in 3Q05, and 464,000 tons in 9M05.

* Railroad general cargo transported for clients in the quarter, 7.789 billion net ton kilometer (ntk), broke the Company's previous record, of 7.466 billion ntk in 3Q04 -- and the total for CVRD's railroads in 9M05 was 20.886 billion ntk.

* Cargo handled for clients in CVRD's ports reached 8.349 million tons in 3Q05, an all time record, and 23.040 million tons in 9M05.

* Gross revenue in the quarter was US$ 3.610 billion, 57.8% more than in 3Q04. Gross revenue in 9M05 was US$ 9.659 million, 59.9% more than in 9M04.

* Operational profit, measured as adjusted EBIT, consisted of US$ 1.405 billion in the quarter, 58.6% more than in 3Q04, and US$ 3.971 billion in 9M05.

* Adjusted EBIT margin in 3Q05 is 40.8%, 430 basis points higher than the average for the 1Q01 - 3Q05 period.

* 3Q05 cash generation, measured by adjusted EBITDA, was US$ 1.734 billion, 72.2% higher yoy. Adjusted EBITDA in the nine months equals to US$ 4.760 billion.

* LTM adjusted EBITDA increased for the fourteenth consecutive quarter reaching US$ 5.761 billion.

* 3Q05 net earning was US$ 1.317 billion, or US$ 1.15 per share, 39.7% higher than in 3Q04. Net earnings in the first nine months of 2005 is US$ 3.645 billion, US$ 3.17 per share, 96.8% higher than the 9M04 net earning of US$ 1.852 billion.

* Annualized return on equity (ROE) for the quarter is 35.8%. * Capex in 3Q05 was US$ 917 million, and US$ 2.309 billion in 9M05.

[ricofrans]

Where will it go from here...?

Despite the earnings, the stock gapped down in big volume.
Perhaps tomorrow action will give some direction for RIO.

Any thought?

Regards,

[mrmarket]

Stole this from Reuters:

Financial Highlights

RIO's revenue growth rate has accelerated in the trailing twelve-month (TTM) from its five-year norm, but not as much as the Industry; as such, RIO has gone from leadings its peers to slightly lagging them. The story is the same with EPS growth rates. The company has improved upon its already superior profit margins, maintaining an advantage over its peers. RIO's dividend has grown at a pace that is considerably faster than the Industry average over the last five years, yet the company's dedicates a much smaller portion of its net income to shareholders in the form of dividends. Still, its current dividend yield is above the norm of its peers. RIO has relatively less debt on its balance sheet.

Regarding its valuation, RIO is priced at a premium to its peers. RIO's price to earnings (P/E), P/Sales, P/Book Value, and P/Cash Flow are above the respective Industry averages. The company's PEG (forward P/E relative to long-term EPS growth rate) ratios are low enough to appeal to even die-hard Value investors.

Digging In The Mines Again

We last wrote about RIO on 07/27/2005, when we last looked at Industrials. RIO caught our eye then when it appeared on the Reuters Select stock screens for Industry Leaders from the Quality segment and Consensus Choices from the Sentiment segment. Back then, RIO was trading just under $32 a share. It has had a nice rally since then, climbing nearly to $45. Since it hit its recent peak, RIO has given back some ground and, at the time of this writing, was priced at about $38.

As we pointed out in our previous article, RIO is the world's largest iron ore mining company. Still, it is working to expand its mining efforts to include other compounds, and it is working to expand its geographic reach. Let's start with its geographic presence for a moment.

Lengthening Reach

Even though it is based in Brazil, RIO has been taking steps to expand in Australia. In our previous article, we mentioned that the company agreed to study a proposed coal project in Queensland state through a joint venture with Australia's Aquila Resources Ltd. and AMCI Holdings Australia Pty. Ltd. Aquila announced that RIO would examine this coal project over the coming months. If it likes what it sees, RIO has the option to assume a 51% interest in the project, with another option to increase its stake to 100% later on. This is potentially a key deal, as there is talk that a fully functioning mine could produce something on the order of 12 million tons of coal each year for the next 40 years or so. If it looks good and the mine can, indeed, produce as expected, then this joint venture would turn out to be a particularly fruitful foray into Australia for RIO.

While the company has been working to expand in other markets, it recently faced a bit of a setback at home, as Brazil's antitrust authority recently dismissed an appeal that RIO had made regarding an earlier ruling that limited RIO's mining acquisitions activity.

More specifically, The Administrative Council for Economic Defense (CADE) turned down RIO's appeal that contested some points of CADE's decision in August. RIO sought to overturn, or at least receive recompense for, the order for it give up iron ore purchase preferences from the Casa de Pedra mine, which is owned by the steel company Cia Siderurgica Nacional.

RIO has indicated that the near-term impact of losing the rights to the Casa de Pedra mine is minimal. But, there is concern that foreign competitors can now come in and buy the iron ore from the mine in the future.

Keep in mind that this case has been going on for about five years, and even though RIO does not have any more appeal options left with CADE, it can take its case to the courts.

Various Metals

A consistent them with RIO that we have discussed in earlier articles is its reserves. It has high-quality ore reserves, which are obviously necessary for the success of any mining company. The kicker here, though, is the low production costs. This has really helped to set RIO apart from its peers, and helps to explain why RIO has profit margins that are far superior to the Industry averages. That said, let's take a moment to get a closer look at RIO's margins.

Over the last five years, RIO's Operating Profit Margin averaged 30.42%, well ahead of the Industry norm of 13.29%. Improvement in business conditions enabled the Industry to widen its Operating Margin to 22.62%, but this pales in comparison with RIO's enhanced figure of 41.74%.

Although the company's strength is iron ore, it is working in other areas. More precisely, it is pushing into nickel. Nickel has various industrial uses, one of which is in the production of stainless steel. Nickel is also used as an alloy in jet engines, gas turbines, and power stations, among a list of others. RIO's Vermelho project is expected to yield something on the order of 46,000 tons per year.

Apparently, demand has outstripped supply in the nickel market over the last couple of years, and the resulting rally in price has given mining companies enough impetus to ramp up production. Because of the time it takes to get up and running, it seems like the current shortage today will persist for a bit longer. But, once those facilities are all up and running, we could actually see an oversupply in a couple of years.

Looking Ahead

Recently, RIO announced that it expects its annual iron ore output to climb handsomely, effectively doubling production within a five-year period. More specifically, the company produced about 140 million tons of iron ore a couple of years ago. Last year, production was up to 211 million tons. The company looks to hit about 300 million tons by the end of 2007.

Part of the reason why the company is ramping up production is to meet solid global demand, especially from China. Demand has been described as relatively stable in Europe and Latin America, but Asia has been very strong, thanks to China, where demand has been high enough that RIO has faced some difficulty keeping up.

While we are talking about demand from Asia, one should note that the company jacked up the price of iron ore nearly 72% to Japanese steel companies earlier this year. During the first six months of this year, RIO sold 11.9 million tons of iron ore and pellets to these steel companies. This helps to explain the solid increase in RIO's revenue and EPS growth of late.

Over the last five years, RIO's revenue climbed at an average annual pace of 21.27%, well ahead of the Industry's 12.70% clip. In the TTM time frame, RIO's revenue growth rate picked up to 54.06%. The overall Industry has also done well of late, with its average top line expanding 55.74%. In the most recent quarter, though, RIO's revenue climbed 84.17%, while its peers saw only 33.99% growth.

Along with solid revenue gains, RIO has also posted impressive EPS advances, with much of the Industry. The company's EPS growth rate averaged an annual clip of 44.31% over the last five years, a touch above the Industry's 41.19% pace. In the TTM time frame, RIO's EPS growth rate accelerated to triple-digits, but its 142.28% pace is effectively on par with the Industry norm of 143.03%. In the most recent quarter, though, we see that RIO took the lead, with a year-over-year gain of 223.29% advance, relative to the Industry's 76.84% pace.

The analysts who cover RIO for further EPS gains going forward. Further, the current estimates for this year and next currently stand higher than they did just a couple of months ago. Two months back, the consensus EPS estimate for this year was $4.10. One month ago, it was up to $4.11. Last week, it was $4.25, and it is currently $4.26. The consensus view for next year has similarly improved. Two months ago, the mean estimate was $4.62; one month ago, it was $4.70. Last week, the consensus EPS estimate for 2006 was $4.85. Currently, it stands at $4.92. Further, the analysts who cover RIO also expect the company to post a long-term EPS growth rate of 21.88% going forward.

Based on the current EPS estimates for this year and next, we see that RIO has forward P/E ratios of 9.23 and 8.00, respectively. Divide these numbers the by the estimate for long-term EPS growth rate, and we see that RIO has PEG ratios that are well below unity - the typical threshold for a Value play.

Based on the numbers, it seems that RIO, which caught our attention as a Growth play, is also deep into Value territory. But, there are many risks here that prospective investors need to watch. For starters, RIO is a mining company, which means that its revenue is directly tied to commodity prices, and those commodity prices rise and fall with demand (economic cycles). Also, RIO is a foreign company, so there are other risks (political, exchange rate, etc.). As always, prospective investors need to carefully weigh their own preferences and tolerance for risk when contemplating any investment opportunity.

[jiesen]

Copper at all-time high... gold, iron to follow?

from:

http://www.marketwatch.com/news/story.asp?siteid=bigcharts&dist=news&guid=%7BACC272AF%2D8504%2D4698%2D8B69%2D948F667108D4%7D

Owning a mining company during these times of increasing inflation is a good hedge against the rising prices:

Copper prices touch lifetime high

Gold gains 2.5% on week; platinum at 26-year high


SAN FRANCISCO (MarketWatch) -- Copper prices touched a lifetime high Friday above $1.90 a pound on supply concerns, platinum hit a 26-year peak and gold futures marked a five-session climb to close 2.5% higher for the week.



Copper ended the week with a gain of 3.2% and platinum rose 4% from last Friday's close.

December copper climbed to a record $1.9065 a pound Friday on the New York Mercantile Exchange. It closed at $1.9055, up 3.4 cents for the session. A week ago, it closed at $1.846.

On Thursday, Chile's copper commission reduced its production estimate for 2005 from 5.5 million to 5.37 million tons, according to Todd Hultman, president of Dailyfutures.com. It also reduced its estimate of 2006 production from 5.52 to 5.51 million tons.

"There appears to be no stopping copper prices," Hultman said, "despite warnings from China that they may sell some of their state copper reserves."

The industrial metal is "in a monster uptrend that shows no sign of dying anytime soon," said Dale Doelling, chief market technician at Trends In Commodities.

"Deliveries of copper [to] the market [remain] tight as can be seen by the widening of the backwardation," said William Adams, analyst at BaseMetals.com. Backwardation is a condition in which a futures price is lower in the distant-delivery months than in the near-delivery months, according to InvestorWords.com.

"Given the break into new high ground, further short covering is likely to send prices even higher, although expect ongoing producer hedge selling to take advantage of the higher levels," Adams said.

"At some stage this hedging is expected to become the dominant factor, but there's little sign of this happening yet," he added.

Gold tallies five-session win

Gold futures closed higher, pulling the December contract up $1.70 to close at $469.40 an ounce. It closed $11.50 higher for the week after ending last Friday at $457.90.

Bombings in Jordan, a large U.S. trade deficit and negative news on the prices of imported goods are all "positive for gold," said Ned Schmidt, editor of the Value View Gold Report, in his latest newsletter.

Looking ahead, "gold should moderate further in the coming week, though U.S. trading activity will be low due to Thanksgiving," he wrote.

Indeed, "with a strong dollar providing a serious headwind, all signs point to lower [gold] prices in the near term," said Doelling.

For now, taking its cue from the current strength in gold, December silver gained ground, climbing 1.5 cents to $7.72 an ounce.

"Silver will likely feel the effects of any weakness in the gold market, but I doubt that we'll see any major decline," added Doelling.

He also said that "silver's stronger technical picture may cause the market to consolidate here, while gold moves down to test support around the $450 level."

Platinum ends at 26-year high

Rounding out the metals action, January platinum rose $6.40 to close at $971.90 an ounce -- tallying a weekly gain of 4%. December palladium finished at $250.05 an ounce, up $7.10 for the day and up 10.5% from the week-ago close.

Platinum prices traded at a 26-year high and palladium prices were at their highest level since May 2004, according to James Moore, analyst at TheBullionDesk.com in London.

"Investment demand looks set to continue in the coming sessions, with platinum potentially targeting the $1,000 level as the market lacks significant chart resistance levels," he said.

"Industrial and jewelry substitution as well as overflow interest in platinum look set to push palladium higher, with resistance now pegged at $250," he added.

As for U.S. inventories, copper supplies were unchanged at 3,690 short tons as of late Thursday, according to Nymex. Silver stocks were down 385,689 troy ounces at 116.4 million, while gold inventories stood at 6.44 million troy ounces, up 116,012 troy ounces from the previous session.

Indexes gain on day, week

After losing around 1% in the previous session, three key indexes for the metals-mining sector climbed to their highest levels since mid-October, ending the week with gains of around 5%.

The CBOE Gold Index tacked on 3.2% to close at 101.52, with a 6% rise in shares of Harmony Gold Mining among the bigger winners. The benchmark gained 5.3% for the week.


Meanwhile, a 4.9% jump in shares of Placer Dome's stock and a nearly 4.4% rise in shares of Coeur d'AleneMineshelped send the Philadelphia Gold/Silver Indexup by 2.9% to close at 111.29 for the session. It finished the week with a gain of 5.2%.

The Amex Gold Bugs Index climbed to 234.26, up 3% for the session and up 4.8% for the week.

[mooddude]

http://www.investors.com/dsa/

http://www.investors.com/dsa/dsaarchive.asp

Tuesday, November 22
Companhia Vale do Rio Doce
NYSE "The Real Most Active"

Analysis of IBD Chart
If a stock gains at least 20% after breaking out of a base, it can start forming a new pattern. Companhia Vale do Rio Doce (RIO) broke out of six-month base in early September (Point 1) and rose 23% to an all-time high the week ended Sept. 30 (Point 2). It pulled back from there and found support at its 10-week moving average along the bottom (Point 3). The stock has now been consolidating for eight weeks, long enough to qualify as a new cup-shaped base. Two down weeks in above-average trade outweigh one up week on heavy trade, so you’d ideally want to see more upside volume before a potential breakout. Shares are 3% off their high.

Analysis of IBD Stock Checkup®
The world’s No. 1 iron ore miner has grown its return on equity from 16.6% to 34.3% to 37.5% the past two years. That helps it earn not just an A SMR Rating (Point 4), but also the best Stock Checkup Overall and Fundamental Ranks (Points 5, 6) in its 47-stock Metal Ores group. The group itself has been on a tear lately. It was at No. 4 in Monday’s issue, up from No. 118 three months ago. That improvement is reflected in its A+ Industry Group Relative Strength Rating (Point 7).