chikinjoe

Long entry for RIO - long-term inflation stock

Long
NYSE:RIO   Rio Tinto Plc
Since my longer term outlook is higher inflation than bond yields, I've been looking for stocks that should perform well in an inflationary environment. RIO is a cash rich stock in the mining and processing of minerals (iron ore, copper, gold, etc) that pays an 11% dividend. The charts appear to show a symmetrical triangle that broke out to the upside before having a significant pullback nearing the top of the triangle, but may have had support from a previous high. Weekly RSI is near the oversold level, but still has room for another drop. My target is near a 3X in price from the current levels based on the size of the triangle it's breaking out of. Even if stocks underperform for the next 3-5 years, an 11% dividend should supplement the underperformance. Having some hedges that perform well in deflationary environments would be best to couple with this trade, as RIO tends to get slaughtered during deflationary shocks that may happen along the way.
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