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Bull of the Day: BHP Billiton (BBL)

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Commodity prices have been on the rise lately. Part of the move can be attributed to US dollar weakness and inflation. The government cannot go printing stimulus checks forever and ever. The other reason comes from supply shocks which are COVID-related. As entire countries locked down, it affected industries like mining. While those shutdowns may feel like they were years ago, the effects continue to linger. It is going to take months for the supply chain to normalize once the entire world gets back to business as usual.

Today’s Bull of the Day is a stock in the mining industry which benefits from higher commodity prices. It’s Zacks Rank #1 (Strong Buy) BHP Billiton . BHP Group engages in the natural resources business in Australia, Europe, China, Japan, India, South Korea, rest of Asia, North America, South America, and internationally. It operates through Petroleum, Copper, Iron Ore, and Coal segments. The company engages in the exploration, development, and production of oil and gas properties; and mining of copper, silver, zinc, molybdenum, uranium, gold, iron ore, and metallurgical and energy coal. It is also involved in mining, smelting, and refining of nickel; the provision of towing, freight, marketing and trading, marketing support, finance, administrative, and other services; and potash development activities. 

Currently, BHP Billiton is a Zacks Rank #1 (Strong Buy). The reason for the favorable rank is analysts have been increasing their earnings estimates for the company. Over the last thirty days, three analysts have increased estimates for the current year and next year. The bullish sentiment has now pushed the Zacks Consensus Estimate for the current year from $4.94 to $6.28 while next year’s number is up from $4.91 to $7.14. That’s important because now, analysts are expecting growth in next year’s number when just a few weeks ago they were expecting to see a contraction.

Those estimates now call for 13.71% EPS growth year-over-year for FY2022. Current year growth forecasts come in at 75.42%. Those are two solid growth numbers for BHP Billiton. They come on revenue growth of 32.45% this year and 6.42% next year.

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