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.
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.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.