Opinion on  Companhia Vale Do Rio Doce (RIO)     Sector: Basic Materials  >  Industry: Metal Mining
Companhia Vale Do Rio Doce

BUY: Companhia Vale do Rio <o:p> </o:p>

Doce (nyse: RIO) <o:p> </o:p>

Companhia Vale do Rio Doce is the world's <o:p> </o:p>

largest producer of iron ore, and a top player in <o:p> </o:p>

coal, nickel and other base metals. It holds <o:p> </o:p>

exploration claims that cover 24 million acres <o:p> </o:p>

in Brazil and 9.8 million acres outside Brazil. <o:p> </o:p>

Despite the fact that diluted earnings per <o:p> </o:p>

share rose 62.9% last year, the stock is selling at <o:p> </o:p>

a ridiculously cheap 12-times expected earnings. <o:p> </o:p>

The stock is on sale because short-sighted <o:p> </o:p>

traders are worried about a recession. But most <o:p> </o:p>

of Vale's business comes from strong markets <o:p> </o:p>

outside of America, especially China, which are <o:p> </o:p>

unlikely to see the kind of weakness we're experiencing <o:p> </o:p>

domestically. Moreover, steel companies <o:p> </o:p>

all over Asia and Europe recently agreed to <o:p> </o:p>

contract price increases of 60% to 86% for iron <o:p> </o:p>

ore and pellets for the year ahead. <o:p> </o:p>

We've owned Vale for less than three years, <o:p> </o:p>

and it's up 386% for us. I think it's <o:p> </o:p>

more likely earth will be destroyed <o:p> </o:p>

by an asteroid than that this company <o:p> </o:p>

won't produce earnings this <o:p> </o:p>

year that more than justify it's P/E of 12 regardless <o:p> </o:p>

of the overall economy. I expect this stock <o:p> </o:p>

to be at least $46 within a year, and probably <o:p> </o:p>

over $50. <o:p> </o:p>

KEY STATS: <o:p> </o:p>

Recent Price: $40.90 <o:p> </o:p>

52 Week High: $38.46 <o:p> </o:p>

52 Week Low: $17.00 <o:p> </o:p>

Market Cap($BIL): $197.6 <o:p> </o:p>

2007 Revenues ($BIL): $32.2 <o:p> </o:p>

2007 Net Income ($BIL): $11.8 <o:p> </o:p>

2007 EPS: $2.42 <o:p> </o:p>

2007 Gross Margin: 48.9 <o:p> </o:p>

2008 Est. EPS: $3.27 <o:p> </o:p>

2008 Est. P/E: 12.2 <o:p> </o:p>

Dividend Yield (%): 0.3 <o:p> </o:p>

Short Interest/float (%): 1.6

Dividend Information
Dividend Yield:	1.80 %
Dividend Yield 5yr Avg:	1.90 %
Dividend Rate:	$ 0.52 %
Dividend Payout Ratio:	14.00 %
Dividend Payout Ratio 5yr Avg:	24.00 %
Dividend Growth Rate 3yr Avg:	26.82 %
Dividend Growth Rate 5yr Avg:	31.00 %
Dividend AllStar™ Ranking:
Consecutive Div. Increases:	1 years
Dividend Payment Type:	Cash
Dividend Declaration Date:	Apr-08-2008
Dividend Ex Date:	Apr-11-2008
Dividend Record Date:	Apr-15-2008
Dividend Pay Date:	May-07-2008
Dividend Amount:	0.2587
Dividend Payments:	Last 12 months payments: 2