Credit Suisse names Rio and Anglo as top mining picks

31st Mar 2014 10:47

Credit Suisse has named Rio Tinto and Anglo American as its top picks in the metals and mining sector.Following two quarters of upgrades, the bank said that earnings momentum across the sector has slowed sharply with most commodity prices now trading below consensus estimates for 2014."While minor downgrades are likely through the second quarter the broader stabilisation in earnings and potential for year-on-year growth in 2014/15 remains in place with cost cutting/operational efficiency likely to remain a persistent theme," Credit Suisse said.The bank believes that the mining sector could deliver "market-leading free cash flows (FCF) in 2015 based on what we see as sustainable capex levels".Rio Tinto, rated 'outperform', remains the bank's preferred "FCF/value play" and its potential for shareholder returns is "larger and could be sooner than any of its peer group".Meanwhile, Anglo American, also rated 'outperform', was applauded for its restructuring potential with the bank confident that management can deliver targeted cost savings and address "problem assets".Rio was trading 2% higher at 3,344.36p by 11:13 on Monday, while Anglo was up 1.3% at 1,528.5p.Credit Suisse also has an 'outperform' recommendation on Glencore Xstrata, Vedanta Resources and London Mining. Antofagasta is the only miner under its coverage rated 'underperform'.BC