Blue-Chip

One Resources Giant Can Face Resistance at the Current Levels - BHP

November 20, 2023 | Team Kalkine
One Resources Giant Can Face Resistance at the Current Levels - BHP

BHP:ASX
Investment Type
Large-cap
Risk Level
Action
Rec. Price (AU$)

This report is an updated version of the report published on 20 November 2023 at 4:15 PM AEDT.

BHP Group Ltd (ASX: BHP) 

BHP Group Ltd is a diversified mining entity with a portfolio of mining assets across the globe. It produces a range of commodities, including coal, iron ore, copper, and nickel.

Recommendation Rationale – SELL at AUD 46.630

  • Profit Booking: BHP’s share price is hovering around the Resistance 1 provided in the previous report on 28 September 2023; and thus, it is offering a profit booking opportunity.
  • Overvalued Multiples: On a forward 12-month basis – key valuation multiples (EV/Sales, EV/EBITDA, Price/Earnings, Price/Book, and Price/Cash Flow) are higher than the average for the Basic Materials sector.
  • Technical Standpoint: The momentum oscillator 14-day RSI (~63.10) is approaching the overbought zone; and thus, price can face retracement from the current levels.
  • Financial Decline: During FY23, revenue and profit from operations declined by 17% and 33%, respectively.

BHP Daily Chart

(Source: REFINITIV; Analysis by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (FY24E) (Illustrative)

Considering the trading levels and risks associated, it is prudent to book profits at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current price of AUD 46.630 (as of 20 November 2023, at 3:59 PM AEDT).

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 20 November 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement.



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