The BHP Group Ltd (ASX: BHP) share price is up 1 per cent to $36.70 today but has plenty of upside over the next 12 months if the gun analysts at Goldman Sachs are on the money.
Goldman's resources specialists ran the ruler over the blue-chip miner on September 9 2019 and took a particular liking to the outlook for BHP's less discussed oil production capabilities.
The analysts appear to think the market is underestimating the free cash flow potential of BHP's remaining oil assets after the big move to sell off its US onshore shale assets in 2018.
"We think oil growth could be a major catalyst for BHP over the next 3-5 years. Our analysis shows the division provides BHP with more stable margins and cash flow vs. mining peers. Since 2009 BHP has traded at a 0.6x multiple premium to mining peers (5.4x average), while trading at a 0.2x discount to oil peers (6.2x average)," commented the analysts.
The analysts also like BHP's strong balance sheet, attractive dividend yield, and potential for an iron ore price rebound later in 2019.
As a consequence Goldman's has slapped a bullish $41.90 12-month share price target on BHP.
Other leading energy and mining stocks that might interest investors include Rio Tinto Limited (ASX: RIO) or Woodside Petroleum Limited (ASX: WPL).
