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Sunday, August 20, 2006

BHP Billiton Limited - Quick Analysis

Hi,

Sorry I haven't updated this for the last few days but I have been very busy. I saw today in the paper that BHP Billiton Ltd is being recommended as a buy.

While I was recommending it back when it was $10 at $28 I have to think twice on whether there will be the continual growth in the future. Commodoties are not rising like the were a few years ago and the stock doesn't look to be undervalued anymore.

The PE is only at 12.75 which is a good number. Its below the market and gives the stock some protection from major falls. The dividend yeild is abismal at 1.5%. But the company does keep on growing the earnings year after year.

The future outlook looks ok as they will conitnue to make money on oil and other commodoties but commodoties seem to be falling recently and after a long boom market this could take a fair hit in the near future.

Overall I see a lot more risk in the future of this company due to the uncertainty in commodity prices. At this stage I would look to get the company under 10 times earnings. This would trigger a re-review when it reaches $22.00

Good Luck investing on the ASX.

2 comments:

Crazy Jim Smith said...

Hi Paul,

BHP announced US$10.5 bliilion profit today.

This is one of my favourites as I think the market will re-rate it upward once they realise that commidity prices will remain high.

Regards.

Crazy Jim Smith said...

Hi Paul,

BHP announced US$10.5 bliilion profit today.

This is one of my favourites as I think the market will re-rate it upward once they realise that commidity prices will remain high.

Regards.