Is the BHP Group (ASX:BHP) share price worth a buy today?

Is the BHP Group Ltd (ASX: BHP) share price a buy today? This ASX resources giant has run in recent months, but could it climb even higher?

| More on:
Female miner uses mobile phone at mine site

Image source: Getty Images

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

Is the BHP Group Ltd (ASX: BHP) share price a buy today? Good question!

BHP has been one of the best S&P/ASX 200 Index (ASX: XJO) blue chip shares to own in recent years. It even fared relatively well during the coronavirus-induced market crash last year, roughly recovering all of its March 2020 losses by August. In contrast, it took until 2021 for most of the ASX banks to do the same. And over the past 5 years, BHP shares have gained more than 132% in value. And that's not even including dividend returns.

As it stands today (at the time of writing) at $48.36 a share, BHP is sitting pretty close to its 52-week (and all-time) high of $50.93. Even at this relatively high share price, BHP still offers a trailing dividend yield of 4.3% (or 6.13% grossed-up with BHP's full franking).

So are BHP shares worth a buy today?

Before we ask that question, let's have a think about what is driving these share price gains. Well, it mostly comes down to commodity prices. As it stands today, BHP's largest operation is iron ore. And as it happens, the price of iron ore is currently near all-time highs. At the time of writing, it's trading for US$197 a tonne. Back in 2016, it went under US$40 a tonne at one point.

But iron ore isn't BHP's only game. It also has significant operations in coal, oil and copper. All 3 of these commodities have also been enjoying a pricing boom of late too. Brent crude is now well back above US$60 a barrel, and coal is above US$85 a tonne. And copper has never been priced so high. It's currently at almost US$450 a pound, more than double what it was this time last year.

So no wonder investors are liking what they see with BHP right now.

Is the BHP share price a buy today?

According to CommSec, investment banker and broker Goldman Sachs has rated BHP shares a 'buy', with a pricing target of $54.20 a share upheld last week. Goldman sees further upside for BHP shares due to a positive outlook on future coal, oil and copper prices going forward. Goldman estimates we will see a 50% rise in BHP's earnings before interest, tax, depreciation and amortisation (EBITDA), and a 10% free cash flow yield in FY2021.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Resources Shares

Female miner standing next to a haul truck in a large mining operation.
Resources Shares

Australia's export earnings to slide as iron ore and LNG forecasts lowered

The price of iron ore is expected to continue to decline.

Read more »

A man in a high visibility vest and hard hat at the wheel of a heavy mining machinery looks backwards.
Resources Shares

What this unexpected supply surge means for ASX 200 mining shares like BHP

Why is everyone talking about the big Aussie miners like BHP, Rio Tinto, and Fortescue today?

Read more »

Pile of copper pipes.
Resources Shares

If Goldman is right, these 3 ASX 200 copper stocks could surge into August

Today could be an opportune time to buy these three ASX 200 copper stocks.

Read more »

Miner looking at a tablet.
Gold

Greatland Resources shares commence trading on the ASX; Macquarie initiates coverage with outperform rating

Greatland Resources shares closed at $7.30 on their first day of trading.

Read more »

A man wearing a hard hat and high visibility vest looks out over a vast plain.
Resources Shares

Is the Pilbara Minerals share price set for a rebound?

The Pilbara Minerals share price hasn’t been this low since 2021. Is it time to buy?

Read more »

Miner and company person analysing results of a mining company.
Resources Shares

The Rio Tinto share price hit a 52-week low last week, is it a buy?

Is this mining giant worth digging into?

Read more »

A man wearing a hard hat and high visibility vest looks out over a vast plain.
Resources Shares

Is the Fortescue share price a buy for passive income?

Let’s dig into the potential of this mining giant.

Read more »

Female miner standing next to a haul truck in a large mining operation.
Resources Shares

Major miners fall as iron ore prices continue to sink

Waning Chinese demand and oversupply concerns push iron ore prices lower.   

Read more »