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Eight base metal stocks to watch Add to ...

The company is scheduled to release its second-quarter earnings on July 29. As per consensus estimates polled by Bloomberg, Vale is expected to report net income of $6.99 billion, or $1.40 per share, compared to $3.7 billion, or 71 cents per share, in the year-ago quarter. Sales are seen surging 48% to $15.29 billion from the same period of 2010. EBITDA is forecast at $9.98 billion versus $5.67 billion recorded in the year-ago quarter.

Recently, the company announced that it will set up a joint venture port with its fertilizer unit Vale Fertilizantes near Santos in Sao Paulo state. The venture would position the mining giant to meet the demand of Brazil's growing agribusiness sector and pave way for expansion in the upcoming years. Vale has identified fertilizers as one of its strategic growth areas. Last week, the company announced plans to invest $2.2 billion to expand activities at its Port of Santos, subject to its board's approval.

Of the 23 analysts covering the stock, 87% recommend a buy and the remaining rate a hold. There are no sell ratings on the stock. Analysts polled by Bloomberg expect the stock to gain an average 27.1% to $42.61 in the upcoming 12 months.

2. Teck Resources engages in the business of exploring, developing and producing natural resources. The company conducts its activities in four business units: copper, coal, zinc and energy. Teck's principal products are copper, steelmaking coal and zinc. Meanwhile, lead, molybdenum, silver and various specialty and other metals, chemicals and fertilizers are byproducts of its operations.

Teck Resources is scheduled to release its second-quarter earnings on July 28, after the markets close. As per a Bloomberg consensus, the company is expected to report sales of $2.88 billion, increasing 40% from $2.05 billion recorded in the year-ago quarter. Net income is estimated at $652.54 million, or $1.08 per share, compared to $365.9 million, or 62 cents per share, in the comparable quarter last year.

EBITDA is forecast to grow by 53% to $1.41 billion, while operating profit is seen increasing by 77% to $1.22 billion. Additionally, cash flow per share is seen expanding to $1.39 from 95 cents per share in second-quarter 2010.

Recently, the company priced its earlier-announced offering of senior unsecured notes and will issue $2 billion in aggregate principal amount of notes. Teck expects to receive net proceeds of almost $1.98 billion from the offering, after deducting underwriting fees and estimated offering expenses. It intends to use these funds for general corporate purposes including estimated capital spending for project development in its coal, copper and energy businesses. Besides, BMO Capital recently raised the stock's rating to outperform from market perform as copper prices have surged to new highs and are likely to spike further.

Of the 21 analysts covering the stock, 86% recommend a buy and 10% rate a hold. Analysts polled by Bloomberg expect the stock to gain an average 35.2% to $71.98 over the upcoming 12 months.

1. Rio Tinto engages in mineral exploration, development, production and processing, and operates in product groups such as aluminum, copper, diamonds and minerals, energy, and iron ore. The company's businesses include open pit and underground mines, mills, refineries and smelters, as well as a number of research and service facilities.

Recently, Rio Tinto reported its second-quarter 2011 results. Global iron ore production during the quarter was up 12% to 49 million tons from the second quarter of 2010. Bauxite production increased 11% from the year-ago quarter. Mid-June this year, Rio Tinto hiked its interest in Riversdale to 99.76%. Meanwhile, in the first half of 2011, the company raised its stake in Ivanhoe Mines to 46.5% from 40.5%. Also, Rio participated in Ivanhoe's rights offering for a total consideration of $1.25 billion.

Looking ahead, Rio Tinto remains cautious about the short-term outlook for aluminum although demand could rise in the long term, thereby doubling its profit margin. The company targets to boost its EBITDA margin by focusing on a series of growth projects that include production, expansion and modernization. It would mainly increase its capacity in high-return areas and pursue Canadian modernization projects that are able to leverage clean and low-cost hydropower generation.

All the 5 analysts covering the stock recommend a buy on it. There are no sell ratings on the stock. Analysts polled by Bloomberg expect the stock to gain an average 41.4% to $101.70 over the next 12 months.

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