Should you buy BHP Billiton Limited at $30 today?

BHP Billiton Limited (ASX: BHP) shareholders have been allowed to catch their breath today with their shares rising 3.8% to be trading back above the $30 mark.

The shares dipped below that point yesterday, touching a fresh five-year low at $29.26, as a result of the waning iron ore and oil prices. Now back at $30.38, the stock trades on a P/E ratio of 11.4x earnings with a market capitalisation just above $94 billion.

However, investors may not want to get too cosy with some analysts expecting further falls for both commodities in the months ahead. While Citigroup believes this could be the bottom for oil at around US$72 a barrel, others have called for it to fall towards US$40 – reflecting a further 44% downside. Meanwhile, iron ore is also tipped to fall well below its current US$71 a tonne price tag as global supply continues to outweigh demand.

Although BHP’s shares certainly look intriguing at their current level, investors would be wise to simply add the stock to their watchlist and wait for the volatility to subside as it is quite possible the shares will fall even further. Until then, there’s an even better way to profit from Australia’s resources sector…

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Motley Fool contributor Ryan Newman (@ASXvalueinvest) does not own shares in any of the companies mentioned.

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