Why can we choose BHP Group and Rio Tinto
Both are projected to provide double-digit returns in the long-term under their current conditions. BHP $BHP Group Ltd(BHP.AU$ is projected to return about 12% annual return (“ROI”) and RIO $Rio Tinto Ltd(RIO.AU$ even higher at about 15%, while the overall market is only about 6%.
The fundamental reason is both BHP and RIO have superior ROCE (return on capital employed). Their ROCEs are both in the range of about 30%, higher than the overall market by 10% (or ~50% in relative) terms. Such higher ROCE gives them the ability to grow faster and return more cash to shareholders, leading to far superior total returns.
The fundamental reason is both BHP and RIO have superior ROCE (return on capital employed). Their ROCEs are both in the range of about 30%, higher than the overall market by 10% (or ~50% in relative) terms. Such higher ROCE gives them the ability to grow faster and return more cash to shareholders, leading to far superior total returns.
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Menit : A quick question, did you consider the stock merger of BHP’s energy assets with Woodside? The size and profitability of BHP may look quite different once this transaction is completed by next week.
JoanFishers : So I'm in both.