Wednesday, January 17, 2007

BHP set to rise ?

The Australian Financial review has noted that warrant trading pertaining to BHP Billition Limited (ASX:BHP)was particularly strong over the first 10 days of 2007. It has been a lot higher than the normal large warrant volumes, due to the company's large size and influence on the market index.

Data from the derivatives markets suggest that Australian and international groups are boosting their exposure to the global miner based on its fundamentals and due to the prospects for the resources sector. In one large recent deal, UBS traded a line of approximately $A200 million worth of BHP shares.

Looking at BHP we see it is acutally a good price. It Price Earnigns ratio is sitting at less than 10 and P/E growth is around 0.70 . Both are good numbers for a very good company. BHP has always tended to be a growth stock and as such pays very meager dividends and in this case it is just on 2%. But if you are looking for a good stock at a reasonable price BHP is hard to go past. It has been as high as $32 in the last year. Looking at the chart I will wait as it is forming a descending triangle pattern on a medium term downtrend. From here the traders could send it either way. Fundamentally though we have the stock in the right price range and it is worth adding to our watchlist.

Historically BHP trades around 11 to 20 PE ratios. This is below the historical value and I believe is set to take a substaial move in the right direction.

Good Luck Investing.

No comments: