BHP Group (BHP-NY) top pick from Norman Levine on BNN.ca Market Call Tuesday Aug 31st @ 1200ET
BHP is the world’s largest mining company, based in Australia, whose main products include copper, iron ore, oil and gas, and metallurgical coal. BHP stock has been weak recently for three reasons. First, it announced it was going to get out of the oil business by merging its oil assets with Woodside Petroleum and spin the resultant shares out to shareholders. We agree with this move as we believe BHP will have a higher valuation as a pure mining company. Second, BHP announced formally that it will begin to develop the Jansen potash property, and third, it announced it would delist from London and no longer be part of the FTSE 100 index. I have long been of the belief that the only time investors should have a meaningful exposure to commodity stocks is when the price of the underlying commodities are rising or plateauing for a long time at a high and very profitable level. Metal prices, after a brief period of profit taking, are going up again. That and the sell-off in shares that was related to non-operational issues makes it a good time to buy BHP. |
