You are here: Home - Uncategorized -

Stock of the week: BHP Billiton returns to ‘buy’ list

Written by:
Helal Miah, investment research analyst at The Share Centre, explains why BHP Billiton is stock of the week – and why the mining and commodities giant has been restored to the broker's ‘buy’ list.

It’s been a tough few years for the mining sector. Demand for commodities in China slowed just as the mining companies were aggressively expanding capacity and production. This led to a supply glut and a fall in commodity prices. Big mining groups such as BHP Billiton suffered as a result and huge asset sales were made, along with enormous losses and dividend cuts.

The mining groups have therefore cut back on large scale investment programmes, drastically cut their costs and focused on balance sheet repair. This has left the likes of BHP Billiton as far more streamlined operations. On top of this we have seen a modest recovery in a broad range of commodities since the lows of early 2016.

These factors have led to BHP reporting encouraging numbers in recent trading updates. At the half year stage they reported profits of $3.2bn versus a loss a year earlier of $5.7bn, net operating cash flows were up by 46%, the interim dividends jumped to 40c from 15c while the net debt had fallen by 23% to $20bn.

The restructuring is taking BHP Billiton back in the right direction and we believe that the worst may be over for the commodities sector. We are therefore reinstating our ‘buy’ recommendation on the stock for investors seeking balanced return and willing to accept a medium to high level of risk.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
energy supplier
Surge in number of energy customers switching supplier

Energy switching hit a six-year high last year as more households shopped around for a better deal.