Broker gives its verdict on BHP shares

MotleyFool
07-20

BHP Group Ltd (ASX: BHP) shares are a popular option for investors looking for exposure to the mining sector.

But should they be buying the Big Australian's shares right now?

Let's see what the team at Bell Potter is saying about the mining giant in its latest Australian Equity Core Portfolio update.

The broker's Core Portfolio "aims to highlight attractive investment opportunities within the Australian Equity market, with a focus on paying the right price for high-quality companies that can deliver long-term growth."

It also notes that the portfolio "is benchmark-aware and aims to generate alpha above the S&P/ASX 200."

So where do BHP shares feature in this portfolio? Let's find out.

What is the broker saying about BHP shares?

Bell Potter is feeling positive and notes that it is focusing its resources exposure on BHP instead of Rio Tinto Ltd (ASX: RIO) and Fortescue Ltd (ASX: FMG). It said:

We have chosen to concentrate our resource exposure through BHP rather than spreading across RIO and FMG. In doing so, we gain access to the company's superior copper growth optionality while maintaining robust iron ore cash generation.

As mentioned above, this is due to its exposure to copper, which the broker is feeling particularlu bullish on. It adds:

The investment case centres on BHP's strategic pivot toward copper, where we see the most compelling commodity fundamentals. Management has committed at least $11 billion to copper expansion projects in Chile, positioning BHP to capture significant value from the global copper deficit expected to come into effect within the next decade. This "future-facing" commodity exposure is particularly attractive given copper's critical role in electrification and energy transition infrastructure.

Finally, Bell Potter believes that a rotation out of the big four banks and into the miners will help drive BHP's shares higher in the near term. It explains:

Diversified mining business, with high quality iron-ore and copper assets ensuring stable cash flow generation. Have divested non-core assets to drive focus and capital behind their core projects.

BHP trades slightly above long-term PE average which is expected when earnings are at cyclical lows. We expect an eventual rotation out of financials and into resources to drive returns.

Overall, Bell Potter appears to believe that this could make it worth considering the mining giant if you're looking for portfolio additions this month.

免責聲明:投資有風險,本文並非投資建議,以上內容不應被視為任何金融產品的購買或出售要約、建議或邀請,作者或其他用戶的任何相關討論、評論或帖子也不應被視為此類內容。本文僅供一般參考,不考慮您的個人投資目標、財務狀況或需求。TTM對信息的準確性和完整性不承擔任何責任或保證,投資者應自行研究並在投資前尋求專業建議。

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