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Is Rio Tinto Group the Top Falling Stock Worth Investing In Now?

Emilia Wright | January 28, 2025

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Is Rio Tinto Group (RIO) the Best Falling Stock to Invest in Right Now?

The stock market has seen a remarkable ascent, with major indices hovering near all-time highs, propelled by factors such as a burgeoning interest in artificial intelligence and optimistic monetary policies following recent Federal Reserve interest rate cuts. However, amidst this rally, many stocks have inflated to levels not observed in years, enticing value investors who are always on the lookout for potential bargains.

Morgan Stanley Wealth Management analysts have raised concerns that valuations have soared too high. Lisa Shalett, chief investment officer, noted, “Policy uncertainty from the new administration appears underpriced,” emphasizing a perception of greater risks than those seen previously. This caution is echoed by a sentiment among investors advocating for diversified portfolios that balance domestic assets with international equities.

Despite the exuberance surrounding the equity markets, analysts like UBS CEO Sergio Ermotti warn that the anticipated decline in interest rates may be stymied by potential tariffs imposed by the upcoming administration, which could have implications for inflation dynamics. “The [truth] of the matter is that we need to see also how tariffs will play a role in inflation,” Ermotti remarked during the World Economic Forum in Davos, Switzerland.

The Opportunity in Falling Stocks

In this context, the emergence of undervalued stocks trading close to their 52-week lows provides a compelling investment opportunity. Economists express optimism about the U.S. economy and stock market, characterized by stable GDP growth, expected interest rate declines, and a business-supportive presidential administration. This environment represents a fertile groundwork for solid falling stocks with promising fundamentals to rebound.

Value stocks, already priced at or below their intrinsic value, typically face lower downside risks compared to their overvalued counterparts. On this note, Rio Tinto Group (NYSE:RIO), a major player in the basic materials sector known for its mining and processing of mineral resources worldwide, emerges as an attractive investment opportunity among falling stocks.

Rio Tinto Group: Investment Overview

Rio Tinto’s performance over the past year demonstrates its current status as a stock with upside potential. The company has a 52-week trading range of $57.85 to $74.24, with a current share price of $61.12. With 30 hedge funds holding positions in RIO, the stock shows a substantial upside potential of approximately 37.12%.

Several factors contribute to the belief that Rio Tinto is one of the best falling stocks to consider. Firstly, there are indications of a proposed merger with Glencore, a move that could create one of the largest mining corporations globally with vast mineral reserves. Such consolidation could also lead to increased market power and a stronger competitive position in the industry.

Strategic Prospects and Market Dynamics

Additionally, reports have surfaced discussing Rio Tinto’s potential acquisition of Teck Resources, aimed at bolstering its industry prospects. Improvements in regulatory conditions under the Trump administration are expected to facilitate approvals for projects such as the Resolute Mine in Arizona, thereby positioning the company favorably to tap into significant copper deposits. This strategic move is particularly vital given the burgeoning demand for copper driven by the electric vehicle market.

A recovering economy in China is also poised to enhance demand for various commodities sold by Rio Tinto, potentially leading to price recoveries that can benefit the company. This combination of mergers, acquisitions, and favorable regulatory trends underscores Rio Tinto’s strong fundamental outlook despite its recent stock performance.

Investment Considerations

In conclusion, while Rio Tinto Group ranks 6th on the list of best falling stocks to invest in, it possesses the structural attributes necessary for recovery and growth. Investors looking to capitalize on current trends in the stock market might find Rio Tinto an appealing addition, especially as the broader economic indicators suggest a supportive environment for such stocks.

Nonetheless, as the marketplace evolves, it is essential to keep an eye out for emerging sectors like artificial intelligence, which may also provide compelling opportunities. For those specifically interested in AI stocks trading at less than five times their earnings, exploring reports on such stocks may yield promising alternatives to traditional investments.