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BHP Billiton – Stick to the big guns……

With reporting season pretty much rapped up, the market should start focussing again on fundamentals. This is the perfect time to pack some BHP into your portfolio in our view.

The stock is currently looking cheap in our view based on 3 factors;

Recent Escondida Strike (Now resolved)
Weaker short-term metal prices
Lower oil prices.
But these are more than outweighed by strength in other businesses.

BHP expects growth in China to remain above 8% for at least the next 5 years.
India is also booming and is now BHP’s fastest growing market.
Bulk commodity prices are expected to remain strong.
BHP’s assets are of high quality, and more importantly expandable.
The company did an excellent job of controlling costs.
The company is ramping up exploration.
We expect the current US$3.0bn buyback to be completed in 12mths (rather than the 18mths specified), resulting in total shareholder returns for the next year of ~40% in our view.
In the low $27 range, this stock is good value and ABN AMRO has a 6-12mth price target of $36.00. It’s time to forget the noise and focus on the fundamentals…….play it long!

not to mention merger/takeover talk
if this was a screaming buy at 29 then it`s a steel at below 27 imho