Morgans says 'attractive buying opportunity' coming for BHP shares

It could soon be time to pounce on BHP shares according to Morgans.

| More on:
builder peeking over board as if watching asx share price

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

If you've been waiting for an opportunity to buy BHP Group Ltd (ASX: BHP) shares, then you could be in luck.

That's because one leading broker believes that short-term jitters could be uncovering long-term value for investors.

BHP shares looking attractive

According to a note out of Morgans, its analysts were reasonably pleased with BHP's recent quarterly update. The broker commented:

BHP posted its 3Q23 operational result. Largely in-line with our estimates and close to consensus.

In response to the result, the broker has reiterated its add rating on the Big Australian's shares with a slightly trimmed price target of $50.40. Based on where they currently trade, this implies potential upside of almost 15% for BHP shares over the next 12 months.

Morgans believes that recent weakness has created a buying opportunity for patient investors. It explained:

Recent weakness is starting to uncover some further value in BHP. On a purely short-term basis (3-6 months) we see further external factors that could maintain volatility in BHP's share price and create some attractive buying opportunities. While on a longer term basis we expect BHP to firm towards our A$50.40 Target Price. We maintain our ADD rating.

Big dividends ahead

It is also worth noting that Morgans isn't just expecting strong gains from BHP shares. The broker also sees potential for some very attractive dividend yields in the near term.

For example, its analysts are forecasting a fully franked dividend of US$1.95 per share in FY 2023 and then US$2.52 per share in FY 2024. Based on the latest BHP share price of $44.00 and current exchange rates, this will mean yields of 6.7% and 8.7%, respectively.

Overall, this means that if Morgans is on the money with its recommendation, investors stand to receive a total return in the region of 22% between now and this time next year. Not bad!

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Scott Phillips.

More on Materials Shares

Miner standing in front of trucks and smiling, symbolising a rising share price.
Materials Shares

Core Lithium share price storming higher on 'excellent' exploration results

ASX investors are sending Core Lithium shares flying higher today.

Read more »

Image of young successful engineer, with blueprints, notepad and digital tablet, observing the project implementation on construction site and in mine.
Materials Shares

Forget Fortescue and buy this ASX mining stock for a 30%+ return

Goldman Sachs thinks this miner is a far better option for investors seeking iron ore exposure.

Read more »

Man with his hand on his face looking at a falling share price chart on a tablet.
Materials Shares

Is the beaten down Mineral Resources share price a bargain buy now?

Let's see what Bell Potter is saying about the miner after Monday's selloff.

Read more »

two men in hard hats and high visibility jackets look together at a laptop screen that one of the men in holding at a mine site.
Materials Shares

Why did the Core Lithium share price hit a wall in October?

The Core Lithium share price rally came to an abrupt end in October. But why?

Read more »

Businessman walking down staircase with suitcase, at sunrise
Materials Shares

Mineral Resources shares sink 7% on CEO exit and 'major actions'

This mining company's CEO is leaving following a scandal.

Read more »

A man wearing glasses and a white t-shirt pumps his fists in the air looking excited and happy about the rising OBX share price
Materials Shares

Why this ASX lithium stock almost doubled in value in October

This lithium miner made its shareholders smile last month. But why?

Read more »

A woman jumps for joy with a rocket drawn on the wall behind her.
Materials Shares

Guess which ASX All Ords stock just rocketed 80%

What is getting investors excited about this stock today? Let's find out.

Read more »

two businessmen shake hands in a close up mid-level shot with other businesspeople looking on approvingly in the background.
Materials Shares

Core Lithium share price higher on 'invaluable' ex-Rio Tinto appointment

The lithium miner has made a new addition

Read more »