The BHP share price has lost 10% in 2 weeks. Here’s why this expert is tipping a recovery

Both China and the United States are planning significant increases in infrastructure spending.
The post The BHP share price has lost 10% in 2 weeks. Here’s why this expert is tipping a recovery appeared first on The Motley Fool Australia. –

After a strong performance through most of 2022, BHP Group Ltd (ASX: BHP) has had a bit of a tough run over the past 2 weeks.

At market open this morning, the BHP share price is down 10% from Tuesday, 19 April, having closed yesterday at $47.98.

The other S&P/ASX 200 Index (ASX: XJO) mining giants have struggled over the past 10 trading days as well, though not quite as much.

The Rio Tinto Limited (ASX: RIO) share price, for example, is down 7.3% over the 2 weeks while Fortescue Metals Group Limited (ASX: FMG) shares have dropped a more modest 1.7%.

A common headwind hitting BHP shares along with Rio Tinto and Fortescue has been the slipping iron ore price, with fears that Chinese demand for the industrial metal could fall amid its reduced economic growth outlook.

Last week, iron ore fell 8.5% before regaining 5.4% over the past few days.

And according to Jess Amir, Australian market strategist at Saxo Bank, demand for iron ore looks set to rebound, which should help support the recovery in the BHP share price and the other top ASX 200 iron ore stocks.

World’s top 2 economies to splash cash on infrastructure

Iron ore is a key ingredient in steel production. And steel, in turn, is vital in the construction of buildings, bridges, roads, and most every type of infrastructure project.

Hence, when the world’s 2 biggest economies are planning major ramp ups in infrastructure spending, demand for iron ore should increase.

According to Amir:

Iron ore buying is expected to ramp up not only because of Chinese President Xi’s calls for ‘all-out efforts’ to boost infrastructure construction like it did in 2007-2008, but also as US President Biden’s $1.2 trillion infrastructure bill will be put to work.

Turning to the slumping BHP share price and the recent declines in Fortescue and Rio Tinto, Amir said, “This supports recoveries in BHP, Fortescue, and Rio still trading lower than 2-week highs.”

Amir also points to the juicy dividend yields offered by the ASX 200 miners, alongside their modest price to earnings (P/E) levels:

These three stocks offer the highest dividend yields in the market, and are far above the average 2.8% yield.

BHP has a yield of 10%, Rio Tinto 9.6%, and Fortescue 13.7%. BHP trades on 10.68 times earnings, Rio on 6.09 times earnings and Fortescue on 5.2 times earnings. And they all have free-cash flows, unlike most growth and tech stocks.

BHP share price snapshot

Although the miner has lost ground over the past 2 weeks, the BHP share price remains up 12.8% so far in 2022. That compares to a year-to-date loss of 3.5% posted by the ASX 200.

The post The BHP share price has lost 10% in 2 weeks. Here’s why this expert is tipping a recovery 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 over 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 January 13th 2022

More reading

What’s the outlook for ASX 200 mining shares in May?
April hasn’t been kind to the BHP share price. Here’s what went down
ASX 200 mining shares just had their best trading day in 5 weeks. What’s next?
Down over 10% in 10 days: Is the BHP share price a bargain buy now?
Cash generation among ASX 200 iron ore shares will ‘be significant’ in 2022: expert

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 Scott Phillips.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US & HK* Trades. Click Here!