BHP Billiton is Evolving: Time to Buy...
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Dec
12
Tim Lambert
BHP Billiton is Evolving: Time to Buy?
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BHP Billiton (NYSE: BHP), the world’s largest natural resources company, is restructuring its operations around the world.  This is resulting in change in the business model of the firm as its sells off assets and realigns its strcture. This is naturally causing short term pain in the stock price of BHP Billiton.

As a result, BHP Billiton is down for the last week, month, quarter, six months, and year of market action (chart below).

For 2014, BHP Billiton has fallen by more than 28 percent.  But this short term pain should result in long term gains for shareholders.  As a result, the present decline of the stock price should be looked upon as a buying opportunity by long term investors.

Despite the pain in its stock price, BHP Billiton remains a very profitable company.

The profit margin is over 30 percent.  That is about three times higher than the average for a member of the Standard & Poor’s 500 Index (NYSE: SPY).  It is above that of high tech giants such as Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT).

BHP BIlliton looks to be a steady grower for the future.

Earnings per share growth is projected to be 5.60 percent.  That is far below the rate of the last five years; and for this year.  But that should not bother long term investors buying with the drop in the share price.

BHP Billiton needs for growth to be strong again in China, India, and other developing nations.  It is selling off assets to focus on that area.  Eventually that should come again as China, India and others have the most potential for economic growth.  That should reward investors in BHP Billiton over the long term, especially with its robust dividend yield, now over 5 percent.  That is more than twice that the average for a S&P 500 member, making BHP Billiton very appealing to income investors!

 



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