BHP is not in an uptrend yet, and it briefly broke below $70 on April 11. It may have farther to fall before moving higher. Many of the metals and minerals it mines and produces are in price-correction mode, and that may be one of the reasons to be cautious about owning the shares yet.
As Badiali points out: "The average bottom in the price-to-book value is 2.44. At today's book value, that works out to $62 per share, about 10% below its current price. The low in the price-to-book value over the last 13 years is 2.16. That would be 18% below its current price."
Yet if you're willing to average down, now may be an opportunistic point to begin doing a bit of "schnitzeling" as our own Jim Cramer likes to call it. For those of you who don't know what "schnitzeling" is, it is Cramer's way of buying a little at a time.
If shares drop much lower, you can buy in larger increments. In the meantime, you'll be getting paid to wait with a rewarding dividend and nice upside potential. With a forward (one-year) PE ratio of 15 and its impressive trailing 12-month operating margin of nearly 30%, BHP looks very promising.Disclosure: As of the time of publication, the author bought a LEAP call and sold a LEAP put on shares of BHP, but does not own any other stock or ETF mentioned in this article. Follow @m8a2r1 This article was written by an independent contributor, separate from TheStreet's regular news coverage.
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