BHP Billiton (NYSE: BHP) is the world’s largest natural resources company with operations spanning the globe from its headquarters in Melbourne, Australia.
It is very profitable, more than three times the average of around ten percent for a member of the Standard & Poor’s 500 Index (NYSE: SPY).
But that still has not prevented BHP Billiton from being down for the last week, quarter, month, six months, and year of market action. BHP Billiton is down in double digits for every single one of those units of time. For 2014, BHP Billiton is off by over 20 percent. That has taken place in a strong year for both the Standard & Poor’s 500 Index and the Dow Jones Industrial Average (NYSE: DIA).
For long term investors, that makes BHP Billiton very appealing!
There is no telling when the share price for BHP Billiton will hit bottom. It is impossible to time the stock market, or any asset class for that matter. What is most important is that the stock appears to be undervalued.
BHP Billiton fits that measure by virtually all standards!
The most recent analyst recommendation for BHP Billiton listed on Finviz.com was positive with a target price o $74 from late July. The mean analyst target price for BHP Billiton over the next year of market action is $58.32. The stock is now trading around $51.35. For income investors, the dividend yield near 5 percent makes the wait endurable.
Based on its trajectory, it certainly appears to be headed lower as the 20-day, 50-day, and 200-day moving averages are all negative.
In addition, many will probably sell BHP Billiton for tax purposes. Since the share price is down, there will probably be selling to write the losses off from taxes for 2014. That could result in many buying the stock back in early 2015, however. That is known as the “wash rule”: a stock must be sold for at least 30 days to be able to write it off as a capital gains loss. While that is short term in nature, the long term appeal of BHP Billiton remains for patient investors!
