Rio Tinto Limited (ASX: RIO) shares, Fortescue Metals Group Ltd (ASX: FMG) shares and CSL Limited (ASX: CSL) shares have performed strongly over the past year.
Rio Tinto, Fortescue Metals and CSL share price
As can be seen in the chart above, each of these Aussie blue chip shares has performed exceptionally well for shareholders in recent times.
Fortescue Metals
Fortescue has staged a miraculous recovery over the past 18 months. After falling to a low of just $1.53 per share in early 2016, Fortescue shares promptly rallied to almost $7 earlier this year as the price of iron ore rebounded fiercely.
As a pure play on iron ore prices, Fortescue's fate is tied to the price of the steelmaking ingredient. And as the world's largest producer and user of steel Fortescue's fate is by extension reliant upon China's spending programs. Thanks to the enormous stimulus announced by the Chinese government last year, Fortescue was thrown a lifeline.
Rio Tinto
Rio Tinto is also heavily dependent on the iron ore price. According to Indexmundi.com, the price of iron ore has rallied 91% year over year. However, Rio Tinto is also a massive producer of copper (up 29%), coal (up 60%) and aluminium (up 21%), amongst other commodities.
With diverse low-cost operations, the company offers more conservative investors a decent exposure to commodity markets. However, as is evident from the $100 billion company's 36% share price rally over the past year, it can be volatile.
CSL Limited
CSL is Australia's — and one of the world's — leading biopharmaceutical companies. It produces a range of blood plasma vaccines for life-threatening conditions. Naturally, its products are in-demand the world over, which is why CSL produces the bulk of its sales outside Australia.
CSL's Australian shareholders are direct beneficiaries of the stronger US dollar, given a lot of its sales are recorded in the greenback. Despite rising some 250% in the past five years, CSL is still being tipped to grow profits quickly over coming years.
Buy, hold or sell
In my opinion, the recent rally in the iron ore price is largely attributable to the giant spending program implemented by the Chinese government, which may not be sustainable. At today's prices, I would rate Fortescue, Rio Tinto and CSL shares as a sell, hold and buy, respectively.
However, even CSL shares may be prone to a large fall if the company does not meet analyst expectations. Therefore, a long-term investor may wish to wade into the shares slowly over time.
