I’m expecting to hang on to these FTSE 100 heavyweights for at least a decade, perhaps much longer. Here’s why.
Rio Tinto
Owning mining stocks like Rio Tinto (LSE:RIO) may remain a bumpy ride if a prolonged battle over trade tariffs transpires. The impact on economic growth — and consequently industrial metals demand — could be considerable. This isn’t the only danger for this particular Footsie share either
There’s also uncertainty over the company’s direction once chief executive Jakob Stausholm steps down later this year. His departure signals the board’s push for more aggressive cost-cutting and acquisition action, according to Reuters.
Yet I’m still confident in the company’s long-term investment potential. Its share price has risen at a healthy annualised rate of 6% since 2005, while it’s also regularly delivered market-beating dividends in that time. Trends that have underpinned this rise — like the growing digital economy, increasing decarbonisation, and urbanisation in developing markets — are set to continue.
Rio Tinto could be a one of the largest winners too, from new-to-redevelop so-called shantytowns in China. This could be a major driver of iron ore prices, a market from which the company sources 70% of underlying EBITDA.
A strong balance sheet positions it well to seize these opportunities through more acquisitions, as the board demands, and through heavy organic investment. Last month, it committed $800m to develop the Hope Downs 2 iron ore project in Western Australia’s Pilbara region. Others in 2025 alone include $1.8bn to extend the life of the Brockman mine, also in Pilbara, and the completion of its $6.7bn takeover of Arcadium Lithium.
Some 19 analysts currently have ratings on Rio shares. And the selection of views is largely positive — seven and five brokers have Buy and Outperform ratings on the business. Seven consider it a Hold, with zero taking a Sell stance.
Ashtead Group
As a provider of rental equipment, Ashtead (LSE:AHT) has considerable potential as infrastructure spending in the US ramps up. So while tough conditions in country’s construction sector is a near-term threat, the potential for robust profits growth further out is considerable.
Repairs and upgrades to transportation assets, modernising energy and water systems, and improving access to high-speed internet are all essential to US economic prosperity. This bodes extremely well for ‘pick and shovel’ stocks like Ashtead.
The American Society of Civil Engineers (ASCE) believes additional infrastructure investment of $2.9trn is required by 2035. And that’s just to put US infrastructure in ‘good’ state of repair.
Ashtead’s Sunbelt brand is focused on the US, where significant expansion has turbocharged profits and pushed its share price 21.1% higher on average each year since 2005. The highly fragmented nature of the market there leaves additional scope for growth-boosting acquisitions too. The company’s is targeting market share of 20%, almost double current levels of 11%.
Today, some 17 analysts currently have ratings on Ashtead shares. Six consider the company a Buy, while another three expect it to Outperform. Seven consider it a Hold, with just one expecting the firm to Underperform.
I think both FTSE 100 shares I’ve described demand serious attention from investors.
