This article is written exclusively for Investing.com
A leading natural resource company
A bullish trend since March 2020
A correction finds a higher low
Climate Change Initiatives Support BHP (ASX:) Equities
An above-market dividend
Industrial raw materials are the building blocks of global infrastructure. China, the world's most populous country, has been the demand side of the commodities market for years, reflecting economic growth.
Meanwhile, the metals, minerals and ores from the Earth's crust have new uses as the world tackles climate change. Goldman Sachs even called it 'the new oil' and said that decarbonization does not occur without the red base metal. The other non-ferrous metals traded on the London Metals Exchange, including , , , , and other ferrous metals and ores, are essential ingredients in batteries and other clean energy initiatives.
Metal prices rose in 2021, with copper, the industrial metals leader, hitting a new record. Since the pandemic-inspired lows of early 2020, the trend has been bullish and is likely to continue into 2022 and beyond.
BHP (NYSE:) is the world's largest producer of commodities. With a share price of $63.60 as of January 31, it has a market capitalization of approximately $94.5 billion. BHP shares have risen since March 2020, but remain below their all-time high of 2011. Increasing demand for industrial commodities and inflationary pressures could continue to push BHP into 2022 as shares peak in 2011, which is more than 64.5. amount, try to defy. % higher than on January 31.
A World-Leading Natural Resource Company
BHP Group is a global resources company headquartered in Melbourne, Australia, with mining interests around the world. BHP is a leading producer of metallurgical coal, copper and uranium. The company's segments include petroleum, copper, iron ore and coal. BHP produces a variety of other goods described on its website.
The world's largest publicly traded diversified commodity producing companies as of January 31 are:
BHP with a market cap of $94.5 billion
Rio Tinto (NYSE:), with a market cap of $91.25 billion
Vale (NYSE:), with a market cap of $79.9 billion
Freeport-McMoran Copper & Gold (NYSE:), with a market cap of $52.92 billion
Glencore (OTC:), with a market cap of $69.44 billion
BHP is a global leader in markets that have been red hot since the lows of early 2020.
A rising trend since March 2020
Commodity prices have exploded higher since March 2020. Most of the commodities BHP produces have risen to multi-year or all-time highs. BHP stock reflects the increase in the resources it extracts from the Earth's crust.
Source: bar chart
The chart highlights BHP's rise from $29.78 per share in March 2020, as the global pandemic gripped markets across asset classes. The most recent high came in May 2021, when copper hit an all-time high. BHP shares traded as low as $82.07, more than 175% above the 2020 lows. At the $63.60 per share level on Jan. 31, the stock was still more than double its March 2020 price. A correction finds a higher low. 2021 high, but trend remains bullish.
Source: bar chart
The chart shows the drop from $82.07 in May 2021 to a low of $51.88 in mid-November 2021. However, the pattern of higher lows remained intact as BHP shares hit the late October 2020 low of $46. 90 do not contest. The level of technical support is now at the low of $51.88 in November 2021. Climate change initiatives support BHP stocks Goldman Sachs analysts remain bullish on copper, expecting the three-month LME forward price to climb to $15,000 a month. tons in 2025. Three-month LME futures contracts came in at $9,916.50 per tonne on Jan. 28, meaning the copper market could see an increase of more than 50%. Goldman is optimistic about copper because there is "no decarbonization without copper". The same goes for nickel and many other battery metals produced by BHP.
Meanwhile, it takes eight to ten years to bring new copper and other metal mines into production, leading to shortages in these markets in the coming years as demand increases. Goldman expects the deficit to continue to weigh on copper and commodity prices, and rising inflation is only exacerbating the trend as it drives up production costs.
BHP not only produces the raw materials that will facilitate tackling climate change, but the company also has targets and a target for reducing operational greenhouse gas emissions, with a net-zero emissions target by 2050. As the world changes climate approach, BHP is perfectly positioned to turn a profit in the coming years.
BHP annual sales and profit chart.
Source: Yahoo (NASDAQ:) Finance
The chart shows the increase from 2018 to 2021. The company has made impressive profits, driving the dividend higher. BHP's annual dividend stands at $8 per share, or 12.6% at $63.60 per share. The returns well above the market are paying shareholders as they wait for the stock to climb to higher highs thanks to rising earnings and profits from the multinational Australian miner.
The all-time high in BHP shares was in 2011 at $104.59, nearly 65% ??above its January 31 price. If Goldman Sachs is right, BHP stocks should remain on a bullish path and challenge the 2011 high for the foreseeable future.
BHP is the raw material producer that should be a core holding company. The company should thrive in the current inflationary environment and tackling climate change only strengthens the case for its stock rises.
