Is the BHP (ASX: BHP) share price a buy? COVID-19 is causing several problems for the resources giant.
What is BHP?
BHP is a world-leading resources company, extracting and processing minerals (like iron ore and copper), oil and gas, and has more than 62,000 employees and contractors, primarily in Australia and the Americas. Headquartered in Melbourne, BHP has shares listed on both the ASX and London Stock Exchange (BHP Billiton Plc).
What’s going on for BHP?
The business has a few key pillars. It’s one of the most attractive aspects of BHP as a resource business that it’s diversified.
Demand for oil has collapsed because of all of the COVID-19 impacts. The oil price is a little higher now, but it’s still a lot lower than a few months ago.
Copper and coal prices weren’t at strong points before the COVID-19 crisis and they’re probably not going to rise strongly any time soon.
Iron ore could come under pressure from China as the stoush between Australia and China continues. China just changed the rules on inspecting iron ore, which could be troubling considering when this change has occurred. China has already hit Australian barley. Australian beef is another commodity facing potential difficulties.
Ultimately BHP can’t generate huge profits if the prices and demand for its commodities are down.
Would I buy BHP shares today?
I wouldn’t want to buy BHP shares in this situation. Under $20 could be interesting, but not right now when there’s large potential downsides. Technology shares could be much better ideas:
2020: 3 stocks to buy for the long run
Amidst the confusion, some researchers value the entire cloud computing market at approximately $US210 billion. If you ask me, it seems clear as day that this HUGE market is only going to get bigger in 2020 and beyond.
Our top investment analyst has just identified 3 growth stocks in a net cash position, with strong competitive forces... and obvious tailwinds at their back.
Claim your FREE investing report on our analyst's "3 best share ideas for the cloud revolution" when you create a free Rask Australia account.
Our report is 100% free and unlocks hundreds of hours of bonus content.
Disclaimer and warning: The information on this website is general financial advice only. That means, the advice does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. Please read our Terms of Service and Financial Services Guide before using this website.
Disclosure: at the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.