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Welcome to Profit Confidential • Monday, May 21, 2012

A Large-Cap Company Worth Serious Consideration

Monday, April 16th, 2007
By Mitchell Clark, B.Comm. for Profit Confidential

Remember Companhia Vale do Rio Doce (NYSE/RIO)? I wrote about this company just over a month ago.

RIO is one of the largest conglomerates in Brazil. The company is one of the world’s largest producers and exporters of iron ore, pellets, and manganese and ferro alloys, which are important raw materials for steelmaking. RIO is also one of the world’s lowest cost producers of aluminum, nickel, and potash and is the biggest logistics operator in Brazil, owning and operating three railroads and eight ports.

I mention this company because when it was first featured, the stock was trading around $35 per share. Now, it’s trading around $41 per share, and it recently hit a new 52-week high of $43.92 per share.

RIO serves to illustrate that you can just as easily make good returns from large-cap stocks as you can with small-caps. I really think this company is going to be an outstanding large-cap moneymaker over the next five years.

The International Monetary Fund (IMF), which is a global economic research organization, just upped its forecast for global economic growth. China is still expected to grow by around 10% per year and represents the largest consumer of iron ore.

RIO is becoming an institutional favorite. Even with the stock performing so well of late, the stock is still reasonably priced on the market. Sure, you’ve got some foreign country investment risk with this company, but it is a global operator catering to the world’s appetite for metals.

The press coverage of raw material commodity prices has lessened in recent months, but precious metals prices are still participating in a broad price upswing that started with oil and gasoline prices. Agricultural commodities are next.

If you have a need for a large-cap company in your portfolio, I’d take a serious look at RIO. There’s no doubt in my mind that institutional investors will continue to favor this company over the next several years.

 

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Profit Confidential AuthorMitchell is a Senior Editor at Lombardi Financial specializing in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for thirteen years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. While Mitchell is not working he enjoys fly fishing, motorcycling and tending to his hobby farm.

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