BHP Billiton Limited
Recent news flow for BHP Billiton Limited (ASX: BHP) has been somewhat disappointing, with the diversified mining company announcing that revenue for the second half of the year will take a $500m hit. The reason behind this is a broken down grinding mill at the Olympic Dam copper and gold mine, which it is believed could take up to six months to fix.
Of course, BHP is due to release its results in the next couple of weeks and, although its share price may be volatile in the near term, it has considerable long-term potential. That's because BHP remains a well diversified company, both geographically and also in terms of the commodities it produces, relative to many of its sector peers.
And, in the long run, it could return to the kind of performance that has seen its cash flow per share rise at an annualised rate of 11.5% during the last 10 years, with its current valuation providing an opportunity to buy-in at a great price. For example, it has a price to earnings (P/E) ratio of 14.9, which seems to be relatively attractive for such a high quality business.
Fortescue Metals Group Limited
With Fortescue Metals Group Limited (ASX: FMG) set to update the market on its recent performance this week, investors should be prepared for its share price to come under pressure, since the company's bottom line is in decline versus the same period last year.
Clearly, the falling price of iron ore is a major reason for this, but while it is at a low ebb, Fortescue appears to be an improved business. For example, it is becoming leaner and in the long run, this could help it to become more profitable.
In fact, Fortescue now seems to offer excellent value for money. For example, it trades on a multiple of just 0.68 times revenue and has a price to book (P/B) ratio of just 1. As such, it could be worth buying for the medium to long term.
Newcrest Mining Limited
While many of its sector peers have struggled in recent months, Newcrest Mining Limited (ASX: NCM) last week reported a rise of 25% in net profit as a relatively resilient gold price helped it to post strong results. Furthermore, Newcrest's cash flow has also improved and, looking ahead, this should enable it to pay down at least some of its significant pile of debt.
Of course, Newcrest is largely dependent upon the price of gold in regard to its future performance, but with it trading on a P/B ratio of just 1.4, it seems to offer good value at the present time. As such, now could be a good time to buy a slice of it, although its share price may not continue to rise at quite the same pace as it has done in the last three months, with it being up 55% in the period.
Of course, finding the best stocks in any sector is a tough task – especially when work and other commitments limit the amount of time you can spend trawling through the index for them.
