Wednesday tips round-up: Rio Tinto, Dairy Crest, Yahoo

17th Jul 2013 06:39

Rio Tinto's production numbers on Tuesday showed the miner is operationally strong, especially in iron ore, The Telegraph's Questor said. The company mined 66m tonnes of iron ore in the second quarter, up 7.0 per cent year-on-year. Iron ore accounted for 86 per cent of earnings last year. Plans to increase capacity to 290m tonnes remain on budget and the group guidance of full-year output in 2013 of 265m tonnes remained unchanged. However, falling prices or spot iron ore pose a problem. Nevertheless, Rio has advantages over other producers as its operations in Pilbara are some of the lowest cost in the world. "So, record production and lower spending are likely to lead to the group seeing a stronger free cash flow over the medium term," Questor said, recommending a 'buy' for the shares.Dairy Crest is a 'good hold' as one of the most solid performers in an at-times challenged sector, according to The Times's Tempus column. Bad weather, up to recently, has hit production at the farm which has affected prices farmers receive and pushed up the price of cream. Dairy Crest was getting £1.70 a litre, compared to £1.0 a year ago, making it more profitable to sell it on the spot market but less so to use it to make its Country Life butter brand. Hence the group has cut back on promotional sales of the butter. Dairy Crest on Tuesday said it was going ahead with plans to use whey, a by-product of cheese-making, to supply makers of baby food which will require a £40m investment but presents a huge market.Yahoo shares have grown 70% in the year since Marissa Mayer was named Chief Executive Officer (CEO) but Tuesday's second-quarter results show the operational turnround is still a work in progress, the Financial Times' Lex column reported. Total revenue was flat and earnings missed expectations, reflecting an 11% fall in display ad revenue, the second straight quarter of a double-digit decline. "Ms Mayer must eventually translate pricey acquisitions, such as Tumblr, and product redesigns into top-line growth," Lex recommended. While many may still write off Yahoo's core internet business, the example of Tim Armstrong, who has been CEO of AOL since early 2009, is instructive. Shares had lost half of their value by mid-2011 as investments were slow to bear fruit but have rebounded since and in its most recent quarter the company showed ad revenue growth. Armstrong has invested heavily, as has Mayer, in building content and platforms that advertisers want. RDPlease note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.