NEW YORK ( TheStreet) -- Let's put it this way, I'm one of those analysts who "eats his own cooking." Put another way, I "put my money where my mouth is." On the other hand, I like to remind readers to do their own thorough due diligence before investing a dime.Let me also remind you that I'm the same person who proclaimed the death of gold and silver stocks in an ironic and perhaps desperate attempt to jump-start this comatose sector. So don't automatically do as I do, for I'm often early to the sector "resurrections." Now that I've said all that, I've also seen "bottoming" formations where the stock of a cash-generating sector leader gets so oversold that I want to start accumulating shares and collecting dividends. That's the way I'm starting to see BHP Billiton ( BHP).
BHP is a leading global resource company, and I like the way the company describes itself at its user-friendly website: "We are among the world's largest producers of major commodities, including aluminum, copper, energy coal, iron ore, manganese, metallurgical coal, nickel, silver
While the S&P 500 and the Dow Jones Industrial Average keep knocking the ball out of the park day-after-day, so does the MSCI Australia Index of Stocks as represented by the iShares Australia ETF ( EWA) with the same name. Take a look at its five-year chart below. It's time for BHP to catch up as there appears to be a "disconnect" that few are taking notice of. EWA data by YCharts
Here's the big news about BHP's share price. On April 10, Matt Badiali, the editor of The S&A Resource Report, pointed out in The Growth Stock Wire that BHP's stock is down 30% from its 2011 peak and that its price-to-book value is quite attractive.
Badiali wrote: "Take a look at the chart below. It tracks the last 13 years of BHP's price-to-book ratio. Book value is simple. It's essentially the value of all its mines. And right now, BHP is trading at an extreme low compared to book value. "BHP is trading at about 2.7 times book value. Its price-to-book ratio has fallen below that level five times in the past 13 years. If you bought BHP stock at those points, you made double-digit gains every time." That is a noteworthy observation. I would add that another compelling reason to consider BHP is because of its self-professed corporate strategy. The best way to describe it is to let the company speak for itself. "Our strategy is to own and operate large, long-life, low-cost, expandable, upstream assets diversified by commodity, geography and market. Our strategy has remained unchanged for over a decade and has enabled us to deliver superior margins throughout economic and commodity cycles for many years. "Our diversified, low cost, tier one asset base enhances the resilience of our cash flow by reducing our exposure to any one commodity or currency and provides for more predictable and robust financial performance. It allows us to invest in and grow our business throughout economic cycles thereby delivering superior long-term value to our shareholders."
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.