BHP Billiton broke out of the falling wedge on 13 January. Last week its share price has been rising, accompanied by increased volume.
THe fundamentals of BHP are sound: the demand for base metals from China and India continues to rise; metals prices are still strong compared one year ago. It has a diversified resources portfolio. It continues to buy back its own shares. Its earnings per share this year is likely to be 20% to 30% up from last year. Its PE is quite reasonable relative to Anglo American. Plus, it is a rand hedge stock, its rand share price will benefit from any rand weakness.
Investors should buy at R130 - R134 and hold. Traders may get in now, or buy at price dips, with a minimum target of R140.
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