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Is the BHP (ASX:BHP) share price great value today?

This mining giant has been tipped as a share to buy…
The post Is the BHP (ASX:BHP) share price great value today? appeared first on The Motley Fool Australia. –

If you’re looking for exposure to the resources sector, then BHP Group Ltd (ASX: BHP) shares could be the way to do it.

This is because the team at Morgans see plenty of upside for the BHP share price and big dividends in the near future.

What did Morgans say about the BHP share price?

According to a note from this week, the broker has retained its add rating but trimmed its price target on the mining giant’s shares slightly to $45.70.

Based on the current BHP share price of $38.62, this implies potential upside of over 18% for investors.

It gets even better, with Morgans forecasting a fully franked dividend of $3.40 per share in FY 2022. This represents a yield of 8.8%, bringing the total return on offer here to approximately 27%.

Why is Morgans bullish?

Morgans notes that BHP has signed a share sale agreement with Woodside Petroleum Limited (ASX: WPL), with the proposal to merge their two petroleum businesses now binding.

This is just one of a number of big moves BHP has made in recent years, which Morgans believes supports the view that Mike Henry was appointed for his vision, not just his operational chops. It notes that BHP has moved decisively to exit coal (ex-BMA) and oil and gas, while pushing ahead with the construction of Jansen (potash).

And while the broker highlights that these are strategic exits from some difficult commodities, the divestments have blunted BHP’s growth profile and reduced diversification. As a result, Morgans believes BHP will soon add to its operations through acquisitions.

It commented: “We do not think this is the last move, and expect BHP to continue to move its portfolio to add further base metal growth options. As a base case we expect more acquisitions of development-ready copper/nickel projects (like Norront Resources), while we see more aggressive M&A of existing miners also a realistic scenario.”

Overall, the broker sees plenty to be positive about and continues to rate its shares highly.

Morgans concluded: “We see BHP as best placed to take advantage of current varying commodity cycles and maintain our Add recommendation.”

The post Is the BHP (ASX:BHP) share price great value today? appeared first on The Motley Fool Australia.

Should you invest $1,000 in BHP right now?

Before you consider BHP, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and BHP wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

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Looking to invest in the electrification and battery theme? Here are 5 ASX shares to consider

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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