Should you buy BHP shares in 2020?

It's hard to know where to look for value on the ASX right now, but BHP Group Ltd (ASX: BHP) shares could be good value after a 30% fall.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's no secret that BHP Group Ltd (ASX: BHP) shares are under pressure right now. At the time of writing, the S&P/ASX 200 Index (ASX: XJO) is down 25.22% this month but BHP is actually outperforming. Shares in the Aussie miner have shed 19.61% in March and 30.60% for the year.

ASX mining shares might not be at the top of the buy list right now. But could BHP shares actually be a good value buy right now?

Why BHP shares could be in the buy zone

It is true that the worst of the coronavirus pandemic is yet to hit Australia. The number of confirmed cases will continue to grow as the virus spreads and testing efforts increase. However, when analysing global companies like BHP, you need to look at the global economy.

We're already seeing China's economy come back online. While it's early days, that could mean demand for basic materials increases in the coming months. Given BHP's presence in the iron ore market, it could see an earnings boost if China's demand holds up.

It's definitely a scary market out there, but it's also a great time to buy. BHP shares are trading at a 30% discount to where they finished in 2019. It's true that the economic outlook has shifted thanks to the COVID-19 pandemic, but we have to remember fundamentals in times like these.

BHP has a strong financial position and I would consider it "too big to fail". While there could be short-term declines in valuations, I think there are plenty of reasons to buy BHP shares right now.

Foolish takeaway

Of course, while BHP shares could still be a good buy, diversification is key. Given the ever-changing response here in Australia, I wouldn't advise putting all your eggs in one basket.

It's easy to feel overwhelmed by the current volatility and 24-hour news cycle. However, I like to trust my strategy and keep some perspective on things. Never invest more than you can afford to lose, don't try and time the market, and invest for the long-term.

If you can do these things, your investment in ASX shares over a long enough time horizon should pay dividends (literally!).

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Resources Shares

An engineer takes a break on a staircase and looks out over a huge open pit coal mine as the sun rises in the background.
Resources Shares

4 reasons to buy BHP shares today

A leading expert outlines four key reasons BHP shares are a buy.

Read more »

Businessman walks through exit door signalling resignation
Resources Shares

Pilbara Minerals share price drops as CFO announces resignation

It’s been a challenging few years for outgoing Pilbara Minerals CFO Luke Bortoli.

Read more »

Miner looking at a tablet.
Resources Shares

What happened with the BHP share price in May?

Did you buy BHP shares in May? Here’s how much the ASX 200 miner returned.

Read more »

Two men in hard hats and high visibility jackets look together at a laptop screen at a mine site.
Resources Shares

Should I buy Fortescue shares today?

A leading investing expert offers his verdict on the outlook for Fortescue shares.

Read more »

A female miner wearing a high vis vest and hard hard smiles and holds a clipboard while inspecting a mine site with a colleague.
Resources Shares

Is this a good time to buy BHP shares?

Should investors jump on the ASX mining shares right now?

Read more »

a miner holds his thumb up as he holds a device in his other hand.
Broker Notes

Why Macquarie expects this ASX 200 copper stock to surge 36% in a year

Macquarie forecasts some hefty gains ahead for the ASX 200 copper miner. But why?

Read more »

A young African mine worker is standing with a smile in front of a large haul dump truck wearing his personal protective wear.
Resources Shares

Following its FY25 result, Macquarie tips more than 40% upside for this ASX All Ords mining stock

Let’s dig into why this is such an exciting stock.

Read more »

Female miner smiling at a mine site.
Resources Shares

Macquarie forecasts 30% upside for this ASX All Ords mining stock

If a broker is right, investors have a lot to gain with this stock.

Read more »