The BHP Group Ltd (ASX: BHP) share price has been having a tough time of late.
Since this time last month, the mining giant's shares have tumbled 16% to $37.07.
This leaves the BHP share price trading within touching distance of its 52-week low of $35.56.
Broker says BHP share price is great value
One leading broker that is sticking with the company is Goldman Sachs. This morning the broker retained its buy rating with a trimmed price target of $42.90.
Based on the current BHP share price, this implies potential upside of almost 16% for investors over the next 12 months.
Goldman is also forecasting some big dividend yields in the near term, which make the potential return even more attractive. Its analysts expect fully franked yields of approximately 14% and 8% in FY 2022 and FY 2023, respectively.
Three reason to buy
Goldman's bullish view is predicated on three key reasons. The first is the premium valuation of the BHP share price. The broker believes the Big Australian's shares deserve to trade at a premium due to its quality. It explained:
Relative valuation: BHP to continue trading at a premium to global mining peers (~0.5x premium to global mining peers over 10-yrs) which we believe can be maintained.
It is also positive due to the company's positive growth opportunities in copper.
~US$20bn copper pipeline to drive production growth and value: BHP's major opportunity (and challenge) is offsetting copper reserve depletion and grade decline through investing in copper reserves/resources (largest globally).
Finally, the broker highlights its strong free cash flow as another reason to be positive on BHP. It said:
Attractive FCF and capital returns outlook: BHP is trading on an attractive FCF/DPS yield of c. 9%/8% over the next 12-m. BHP's minerals capex increasing to US$8-9bn by mid-decade (but below peer RIO at US$9-10bn)
