Broker tips: BHP Billiton, Rio Tinto, Persimmon

19th Aug 2014 12:20

BHP Billiton's proposed demerger may have disappointed some shareholders with the absence of a one-off capital return, but The Share Centre still rates the mining giant as a 'buy' on the back of its diversification and capital efficiency."Despite the demerger plans the company will remain one of the most diversified large cap miners. Capital efficiency after the demerger should improve and management are targeting to increase the dividend pay-out ratio from the current 48%."Rio Tinto's heavy exposure to iron ore shouldn't necessarily be seen by the market as a bad thing, according to Investec. The broker has maintained its 'hold' rating for the stock, but hiked its target price from 3,220p to 3,552p.It said that the iron ore division's "exaggerated operating margins" means that Rio Tinto has the capacity to withstand high price volatility. Persimmon is in an "extremely healthy" position, according to Hargreaves Lansdown Stockbrokers, despite concerns about the stock's valuation and a potential cooling of the UK housing market."Also showing signs of improvement is the market consensus, which has recently strengthened to a 'buy'," it said.BC