But it isn’t just the benchmark Aussie index that Rio Tinto has outperformed this year. Rival miner BHP Group Ltd (ASX: BHP) shares are up just 13.51% in 2019 as iron ore markets have softened.
So, which one of these Aussie mining giants is better value in 2020?
BHP shares versus Rio shares in 2020
Both of the Aussie miners tend to move similarly, given the similar natures of their businesses.
However, Rio Tinto shares have climbed 13% higher than BHP this year, and 2020 could follow the same pattern.
BHP is much larger than Rio by market cap ($181 billion vs. $36 billion) but that hasn’t mattered in 2019.
BHP shares are yielding 5.02% compared to Rio’s 4.12% yield, which could make it more attractive for dividends in 2020.
However, BHP trades at a price-to-earnings multiple of 15.5x compared to Rio’s 8.3x multiple. That means in theory you are getting nearly double the earnings per dollar paid for Rio shares versus BHP.
Both companies are trading near the top of their 52-week ranges, which could be viewed positively or negatively. If you think there’s some momentum behind Rio, I’d say it could be a better buy than BHP shares in 2020.
Is either ASX mining stock in the buy zone?
While BHP shares look like worse value than Rio Tinto in 2020, I’m not sure either would be top of my ASX shopping list right now.
Mining is under pressure with the US–China trade war saga stretching into next year, which is why I think a stock like Harvey Norman Ltd (ASX: HVN) could be a better option.
Harvey Norman shares are yielding a tidy 7.61% and have climbed 39.61% higher in 2019.
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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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