Broker tips: Mining stocks, Essar Energy

22nd Jul 2013 11:53

Canaccord Genuity has kept its 'buy' rating for Rio Tinto and turned more positive on Antofagasta, highlighting the two mining majors as 'quality names at discount prices'."Recent underperformance has opened up attractive entry points for mining names with good quality assets that should generate solid cash flows under most plausible metal price scenarios," said analyst Peter Mallin-Jones. Rio Tinto remains Canaccord's preferred stock and is the cheapest among the large-cap mining sector. Morgan Stanley has upped its target price for gold mining giant Randgold Resources but has taken a more cautious stance on sector peer African Barrick Gold (ABG)."Despite the pullback in gold equities, we see risk of further de-rating triggered by reserve downgrades and weak cash flows. Randgold (rated 'overweight') looks well positioned to continue to outperform in the current environment, while ABG (EW) faces heightened risks and has limited scope to raise returns."Citigroup reckons that Essar Energy is well placed to benefit from changes to the energy industry in India, as it upgrades the stock from 'neutral/high risk' to 'buy'."After years of constraints, India now looks to be picking up the pace of energy market reforms in an effort to encourage investment and reduce energy shortages that have plagued parts of the country. Specifically, the recent months have seen major changes to gas prices, petrol prices and coal-price pass through," said analyst Mukhtar Garadaghi.BC