The Global Commodities Outlook Continues To Improve
FNArena News - January 14 2010, By Andrew Nelson
Deutsche is most bullish on the bulks (iron ore, thermal coal, coking coal) and aluminium, upgrading price forecasts by 20%-40% across the space. The broker also remains positive on copper, nickel and gold.
Yet despite expected strong increases in bulk commodity prices in 2010, the broker thinks that both coal and iron ore stocks have priced in much of the upside. The team sees Rio Tinto (RIO) as being the best way to take an exposure to the bulks, particularly iron ore. Thus the broker prefers Rio over BHP Billiton ((BHP)). Deutsche also thinks that small names such as Avoca Resources ((AVO)) offer better leverage.
The broker's iron ore and base metal upgrades see it earnings estimates for Rio increase by around 35% in 2010 and 2011, while its BHP numbers increase by about 25%. The biggest EPS increases the broker pushed out yesterday were for Macarthur Coal ((MCC)) and Centennial Coal ((CEY)), whose FY11-12 forecasts were lifted by 40-60%.
CEY Price at posting:
$4.19 Sentiment: Hold Disclosure: Held
