RBC says so:
Upgrading to Top Pick Our view: Following the recent pullback, Rio Tinto is screening as inexpensive as it’s been over the past 5 years. We believe the market is taking too negative a view on the medium-term iron ore market, and this is obscuring a growing, low cost, high free cash flow story. In conjunction with our Miningball note, we upgrade Rio Tinto to Top Pick.
Key points: Miningball suggests the time is right for the sector, Rio’s strong position and low valuation drives upgrade – We have published an industry piece here which outlines what we believe are the compelling dynamics that the mining sector faces. Low levels of industry expansion capex to EV, falling total costs and EBITDA margins that still have room to grow all indicate the sector is in a strong position for forward equity returns. Rio Tinto’s low cost operations, its strong balance sheet, and its potential for increased cash returns should see the market tighten the valuation over the coming months.