A director has been buying up BHP shares. Should you?

BHP Group Ltd (ASX: BHP) director Gary Goldberg bolstered his stake in the S&P/ASX 200 Index (ASX: XJO) giant last week. The purchase has likely left market watchers wondering if the insider is expecting big things from the iron ore monolith.

Further, some might question whether the insider transaction signals that now is a good time to buy BHP shares. So, with that, let’s take a look at what analysts are expecting from the stock.

The BHP share price is $47.07 at the time of writing – 0.34% lower than its previous close.

For comparison, the ASX 200 is lifting 0.95% right now.

Is now a good time to invest in ASX 200 iron ore giant BHP?

Director Goldberg forked out more than US$58,000 to buy 1,000 BHP American depositary shares (ADS) – equivalent to 2,000 BHP shares – on market for around US$58.37 each last week.

That represents a total spend of approximately $87,500, or $43.77 per ASX share, based on the current exchange rate.

Top broker Macquarie is likely to herald the buy as a bargain. It has an outperform rating and a $52 price target on BHP shares, my Fool colleague James reports. That marks a potential 10% upside on the stock’s current price.

Macquarie thinks the company’s cash flow could be set to benefit from strong iron ore, coking coal, and copper prices in the years to come.

But not all experts are so bullish. Sequoia Wealth Management senior wealth manager Peter Day tips the stock a sell saying, courtesy of The Bull:

China’s recovery may be driven by consumption rather than construction. Consequently, we’re cautious about the outlook for iron ore – at least in the short term.

Also, growth in scrap steel and China’s decarbonisation agenda may impact demand for steel over the medium term.

Much of the company’s income comes from iron ore sales. Thus, its earnings could suffer if the price of the commodity were to slump.

Day also highlighted the ASX 200 giant’s recent first-half results, wherein it recorded a 32% fall in profit after tax, coming in at US$6,457 million.  

BHP share price snapshot

The BHP share price has outperformed in line with the ASX 200 so far this year.

Both the stock and the index have gained 4% year to date.

Looking longer term, however, the iron ore giant’s share price has crashed 10% over the last 12 months. That’s compared to the ASX 200’s 4% dip.

The post A director has been buying up BHP shares. Should you? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 2 ASX 200 mining directors buying up their company shares in the past week
• Why did the BHP share price see-saw in March?
• Why did the BHP share price have such a top run today?
• ASX shares are paying out $19 billion in dividends this week. Are you getting a piece?
• The trimmed-down BHP dividend will be paid today. What’s next?

Motley Fool contributor Brooke Cooper 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 positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/CiG9ujE