Why did the BHP share price take a tumble in June?

BHP shares dropped into the red in June. Here’s what happened…

| More on:
a sad looking engineer or miner wearing a high visibility jacket and a hard hat stands alone with his head bowed and hand to his forehead as he speaks on a mobile telephone out front of what appears to be an on site work shed.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • BHP's shares tumbled lower during June
  • Broad market volatility and commodity price weakness weighed on its shares
  • One broker appears to see this as a buying opportunity

The BHP Group Ltd (ASX: BHP) share price had a tough month in June.

During the period, the mining giant’s shares dropped 7.5%.

Though, this is actually better than the ASX 200 index, which tumbled 9% over the same period.

Why did the BHP share price tumble lower in June?

As well as battling broad market weakness, the BHP share price came under pressure from a pullback in the iron ore price.

For example, on Thursday the price of iron ore for September delivery fell a further 2.7% on China’s Dalian Commodity Exchange. This put the steel-making ingredient on track to record a quarterly loss of approximately 11%.

In addition, the copper price has come under pressure significant pressure. So much so, the metal tumbled again on Thursday to record its biggest quarterly slump since 2011. This has been driven by concerns that a recession could impact demand.

Finally, the announcement of new coal royalties in Queensland weighed on mining shares during the month.

Is this a buying opportunity?

Analysts at Goldman Sachs appear to see the weakness in the BHP share price as a buying opportunity.

A note from earlier week reveals that its analysts have resumed coverage on the Big Australian with a buy rating and $49.40 price target.

This implies potential upside of 22% for investors over the next 12 months from current levels.

In addition, Goldman Sachs is forecasting fully franked dividends per share of US$3.50 in FY 2022 and then ~US$2.65 in FY 2023. Based on the current BHP share price and current exchange rates, this implies yields of 12.5% and 9.5%, respectively.

All in all, this suggests that there’s a total potential return on offer of almost 35% for investors over the next 12 months.

Motley Fool contributor James Mickleboro 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Resources Shares

ASX share price rise represented by investor riding atop leaping lion
Share Gainers

Why has the Liontown share price roared 30% higher in a week?

What's driving Liontown shares higher lately?

Read more »

A man faces a mine with arms outstretched.
Resources Shares

3 ASX mining shares primed for an ‘exponential’ energy transition: expert

This expert details a diverse basket of stocks with exposure to rare earths at different points along the value chain.

Read more »

A woman charges up a steep hill in the mountain ranges.
Resources Shares

Up 85% in a month, Lake Resources share price extends gains on Wednesday

It's another day in the green for the lithium miner.

Read more »

A smiling woman holds an arm in the air in triumph while also holding a graphic of a fully-charged battery in her other hand representing the Pilbara Minerals share price
Resources Shares

The Pilbara Minerals share price has powered 28% higher in a month. What’s been happening?

Lithium has been on a wild ride recently.

Read more »

A white EV car and an electric vehicle pump with green highlighted swirls representing ASX lithium shares
Resources Shares

Could this new development boost Allkem shares heading into 2023?

ASX lithium shares have been among the strongest performers over the past 12 months.

Read more »

A worker stands over a large copper coil in a factory
Resources Shares

What’s so good about copper anyway?

Why are investors going mad for copper?

Read more »

Two mining workers in orange high vis vests walk and talk at a mining site
Resources Shares

Why Lynas shares and one other ASX 200 rare earths miner are in this expert’s ‘core basket’

Rare earths stocks have been getting attention as demand continues to soar for the group of metals.

Read more »

Miner with thumbs up at mine
Resources Shares

‘Phenomenal start’: Here’s why ASX gold share Tempus Resources just rocketed 53%

Tempus Resources shares are on fire today.

Read more »