BHP Billiton Limited (ASX:BHP) is one of Australia's largest companies with a market capitalisation of $127.5 billion. Its shares have been on a great run since the start of 2016 growing by 67% since 15th January 2016.
However, just because its share price has done well doesn't mean it will keep growing or even stay at the price level that it's at now. Here are three reasons I think you should offload your shares today:
Unsustainable prices
Resource and material prices are unlikely to stay this high for long. There is still an imbalance between current supply and likely medium term demand for materials, particularly BHP's coal and oil. Other large producers are also likely to ramp up their production based on these prices, which will negatively affect the supply/demand ratio.
Brazil disaster
The Samarco disaster repercussions could take a while to be fully realised and dealt with. It has taken several years for BP to get over the Deepwater Horizon incident and the same could happen with BHP.
Resource stocks don't have strong economic moats
Cyclical stocks like BHP just aren't very dependable. It owns mines and oil reserves with finite lives, which don't have any advantage over a competitor's product and whose price is entirely decided by the world market. That doesn't put BHP in a strong position at all.
Foolish takeaway
I think today is the right time to sell your BHP shares. The last two years have already shown how unreliable the share price and dividend can be for BHP shareholders.
