Rio Tinto 'Top Pick' For Canaccord

Rio Tinto plc's RIO healthy profit margin should continue in 2015 as the rapid decline in commodity prices moderates, an analyst said Tuesday.

The mining company, which unveiled a $2 billion buyback earlier this month, closed up nearly 2 percent at $49.42 a share.

Canaccord's Nicholas Hatch reiterated a Buy rating on Rio and raised his target by 6 percent to 3,980 pence sterling, or about $61.48.

The company's buyback plan, plus dividends, amount to about $6 billion in cash return to shareholders, according to Hatch, who said the measures "demonstrate financial strength."

Nearly 70 percent of Rio's business is focused on iron ore, but it also mines aluminum, copper, diamonds, gold, coal and uranium.

The company expects to reduce 2015 costs by $750 million and cut capital spending to less than $7 billion.

Hatch forecast a dividend hike to $2.37, from $2.15 and said the company remains his "top pick" in the mining industry.