Mines Make Excellent Earth Day Investments

by The Investment U Research Team

In honor of Earth Day, we looked at a few companies dealing specifically in earth, lots of it. Rio Tinto (ASX: RIO) and BHP Billiton Limited (ASX: BHP) are the largest diversified mining and resources companies in the world.

While we can’t talk on their environmental impacts, which may or may not be great, we can look at their place in the global markets and the commodities cycle. It’s no surprise that they are stable barometers of the economic health of the world economy.

And like Freeport-McMoRan (NYSE: FCX) they’ve seen their profits sink over the past year as the downturn went global and commodity prices fell off a cliff.

BHP has been discounting its coal rates to help move its production along, selling almost a third of its cola at roughly 40% off. As the closest mining behemoth to the Asian markets, Australian based BHP is poised to profit the most from a rebound. It also explains why Rio Tinto has outperformed BHP Billiton this year.

In a rare bit of earth day karma, we find ourselves in agreement with perennial-humbug Jim Rogers, who sees opportunity in the commodities sector. The prices in this sector have touched the bottom recently. And while we don’t see anything that would give an immediate bump in the short-term, the long-term potential for these companies is huge.

So take a look around the commodities sector, you’re seeing prices in many that are at or near substantial lows. And that includes oil. We haven’t talked much about it lately, but it’s worth noting that crude is below $50.

Dave Fessler will be discussing the potential for oil tomorrow.

Companies mentioned in this article: RIO, BHP and FCX.

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One Response to “Mines Make Excellent Earth Day Investments”

1. Kris Says:
   April 22nd, 2009 at 7:23 pm

   this is a joke, right? i find it truly laughable that you talk about earth day, coal mines and karma all in the same article. think it might be time to erase the blackboard.

   Reply

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