It’s no secret that BHP Group Ltd (ASX: BHP) shares are under pressure right now. At the time of writing, the S&P/ASX 200 Index (ASX: XJO) is down 25.22% this month but BHP is actually outperforming. Shares in the Aussie miner have shed 19.61% in March and 30.60% for the year.
ASX mining shares might not be at the top of the buy list right now. But could BHP shares actually be a good value buy right now?
Why BHP shares could be in the buy zone
It is true that the worst of the coronavirus pandemic is yet to hit Australia. The number of confirmed cases will continue to grow as the virus spreads and testing efforts increase. However, when analysing global companies like BHP, you need to look at the global economy.
We’re already seeing China’s economy come back online. While it’s early days, that could mean demand for basic materials increases in the coming months. Given BHP’s presence in the iron ore market, it could see an earnings boost if China’s demand holds up.
It’s definitely a scary market out there, but it’s also a great time to buy. BHP shares are trading at a 30% discount to where they finished in 2019. It’s true that the economic outlook has shifted thanks to the COVID-19 pandemic, but we have to remember fundamentals in times like these.
BHP has a strong financial position and I would consider it “too big to fail”. While there could be short-term declines in valuations, I think there are plenty of reasons to buy BHP shares right now.
Of course, while BHP shares could still be a good buy, diversification is key. Given the ever-changing response here in Australia, I wouldn’t advise putting all your eggs in one basket.
It’s easy to feel overwhelmed by the current volatility and 24-hour news cycle. However, I like to trust my strategy and keep some perspective on things. Never invest more than you can afford to lose, don’t try and time the market, and invest for the long-term.
If you can do these things, your investment in ASX shares over a long enough time horizon should pay dividends (literally!).
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As of 17/3/2020
Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.