Barclays has joined the brokers, including UBS, JPM, RBC andBBY,...

Barclays has joined the brokers, including UBS, JPM, RBC and
BBY, who have recommended buying Aussie iron ore miners after the recent selloff triggered by the plunge in the spot price. The broker raised Fortescue to Overweight from Equalweight, while boosting its price target by 20% to A$6.00.

"We believe FMG's fundamentals are more linked to the deleveraging process after the cycle has peaked and cash flows are flowing through, than to iron ore prices,"says Ephrem Ravi, head of metals & mining Asia Ex-Japan equity research.

"We think the 20% pullback in FMG's share price over the past two weeks on significant uncertainties in the iron ore markets provides an opportunity to revisit the stock, given that our concerns on a 'flash crash' in iron ore prices already appear to beplaying out." He says that even at a US$100/ton for iron ore, Fortescue will have a net cash position in three years, with 40% upside potential to the share price if its EV/EBITDA multiple remains stable. FMG was last up 2% at A$4.93.

That's five big brokers, including one of the world's biggest, - on side with FMG. A pretty formidable team.

Also, a further report today repeats with evidence, the penchant for the huge SMSF army to go for growing dividends for cash income.

All these guys can't be stupid?

Anyone following my recent posts on FMG will remember that I said all bets were off for me under $5. Well, I had a pretty good look at it, and decided that the risk of holding was viable, - the sudden dip seemed to be short-driven, not any fundamental problem. There are still plenty of FMG sceptics, and lots of shorts, so plenty of buying to be done.