Commodity Giant BHP Sporting Attractive Fundamentals

BHP Billiton (ticker: BHP) is a global mining, oil and gas company headquartered in Melbourne, Australia and with a major management office in London. It is the world’s largest mining company measured by revenue and third-largest measured by market capitalization.

BHP has the largest footprint in the international commodity space, with operations worldwide in oil, gas, gold, copper, zinc, iron and other related metals. The stock has dropped nearly 13% from its recent trading range in the 90 area, with the shares now trading under $78.

At these levels, BHP sports a very attractive 9.3 TTM P/E (trailing twelve month price-to-earnings) ratio, especially given its revenue growth rate of nearly 20%, providing a PEG ratio under .5. BHP also has a dividend yield of 2.7%, another metric that is trading at trough levels.

Technically, BHP has some intermediate-term support around the 77.50 level, an area that consolidated and held during the latest selloff. With expectations of 8.55 per share earnings power, and a slight multiple expansion to 10 on a P/E basis, I look for BHP to grind higher towards the 85 level by year end.

Tim Biggam
Tradingblock.com

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