Sold Rio; Jump on the BHP Buillitrain
by, 12th-November-2007 at 03:44 PM (2883 Views)
Well Rio is officially super-expensive, I do not touch stocks with a P/E of 25, I sold it off at $135, it felt crushing to see it surge to $150 today ... but hey, I'm the one who called on Rio as the best stock to invest in!
BHP is getting extremely cheap and these prices are just irresistible.
The worlds biggest miner is just on a P/E of 16, Rio is at a staggering 25, imo its suicidal to make a bet on Rio unless you love lottery tickets.
BHP introduced a sweetener today, a $30b buyback should they agree for a merge, but its not enough for Rio.
I think BHP will launch another bid, but its just too risky to buy it at such a price, and whats the most it can do, probably $160-$200? And if it falls it'll slide to a $100.
Should the bid fail or not pass competition regulators then people will pull out of Rio and restore their stakes in BHP again, BHP is at a ridiculous discount!
I've bought at $44, $43, $42 and $41.50, I hope it falls down to $38.50 where there is some heavy support, but even then it's still a fantastic buy!
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