Today I'd like to present a stock that benefits from the whole nine yards of the commodities cycle. From coal to copper, diamonds to aluminum, this stock has a lot of potential. Without further ado, I give you:
BHP Billiton Limited (NYSE:BHP), together with its subsidiaries, engages in mining, drilling, and processing mineral resources. It produces iron ore, copper, nickel metal, manganese, diamonds, silver, titanium, aluminium, and uranium. The company also engages in the exploration, production, and development of oil and natural gas in Australia, the United Kingdom, the United States, Algeria, Trinidad and Tobago, and Pakistan. (Source: Y! Finance)
Catalysts that make BHP a buy:
* The increased global steel and aluminum production will lift demand for BHP's base metal products. Sales should also increase in the stainless segment as a result of the inclusion of the WMC Resources Limited acquisition for a full year, aided by sharply higher profits in the carbon steel, petroleum and base metals segments.
* BHP Billiton Chairman, Don Argus, points out that while demand in China is stabilizing, other emerging countries in South America and Africa as well as Russia will continue to drive demand.
* To meet demand in the top three profit areas, BHP Billiton has forged a collaboration agreement with Shanghai’s Baosteel Group, a large iron and steel conglomerate, to exchange technical expertise and best practices. The goal for BHP Billiton is to establish a commercial resource agreement with Baosteel in order to benefit for China’s world leading demand and use of steel.
* BHP kicked off six major oil projects last year including drilling in the Gulf of Mexico to increase its oil production capabilities. BHP also acquired WMC Resources last year to bolster its copper and nickel businesses.
* BHP was also the first extraction industry company to win the United Kingdom award for Corporate Social Responsibility. BHP has a tremendous focus on and recognizes Sustainable Development, which involves elevating environmental and social, as a key factor towards successful business operations.
* With production concentrated in the hands of fewer companies, better production and pricing discipline should result in less volatile sales and earnings over the course of the business cycle. With its large reserves of coal, iron ore, nickel and copper, BHP's earnings should benefit from China's rising steel production and growth in infrastructure spending.
Energy numbers are going to be coming out today. According to CNBC, traders expect a drop in reserves. In either cases, I believe BHP will continue to benefit from the current bull market in commodities.
BHP 1-yr Chart
Please note: I do have a position in the stock