Monday, January 29, 2007

BHP Billiton on the way up

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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