Before making a decision to invest in nay stock, you should check some factors for the potential companies. The things that should be analyzed well before investment are
- Cash flows of the company
- Low Debt Burden
- Company that care about the shareholders
- Growth potential
Companies that have high value of E/P are more risky to invest. It shows that their market value is low but they are currently paying more. (Fatemi, A., Fooladi, I.2006), The growth of the company can be analyzed by asset turnover ratio .It is evident from the ratios mentioned above that Rio Tinto has better situation is this ratio. Moreover, the rate of increase is also much higher that BHP.
The value of earning per share is also an important factor to support any investment.(Newman,P, 2006) These figures are also in the favor of Rio Tinto. Therefore, I would recommend to invest in the shares of Rio Tinto would be a better option.