BHP Group Ltd (ASX: BHP) shares have endured a turbulent year and remain under pressure due to a downturn in the mining cycle and volatile commodity prices.
As of now, BHP shares are trading at $40.19 apiece, down more than 20% this year date, with a 5.7% slip in the last month alone.
So, the mining giant has had a difficult year on the chart, but wise investors don't think in single-year terms. Long-term, BHP remains well above its 2016 lows of $113.66 apiece, compounding at an average rate of 16.6% per annum to today's price.
Meanwhile, it currently trades at a similar valuation as it did back then at 19 times earnings, suggesting the stock has grown along with the business and not the other way around.
With that in mind, let's take stock of where we are at with the mining giant and what its next moves might be. Here's what the experts say.
Is copper the key to BHP's future?
BHP shares are highly sensitive to the prices of the commodities the company mines and produces. One of the major themes driving future innovation is the 'electrification of things'. For that, we need loads of copper.
BHP's focus on copper has consequently become a cornerstone of its growth strategy. The company recently showcased extensive plans for its Chilean copper operations, which include projects worth up to US$15 billion in capital expenditure.
According to the International Trade Administration, Chile is the world's largest copper producer, with 27% of the global supply.
It's no surprise, therefore, to see analysts at Goldman Sachs praise the move.
The broker reckons that BHP's long-term copper production could fuel earnings growth in the coming decade.
It, too, sees copper as a key growth area due to rising demand from the electrification and renewable energy sectors.
The question is, how will the mining giant navigate all of this in a world of rising costs and climate policy?
Goldman's answer to this seems satisfactory, in my view. First, the miner's balance sheet gets two thumbs up.
Second, it says BHP may explore asset sales or leaseback opportunities to support its funding needs.
This means the broker has retained a buy rating on the stock and a price target of $47.30.
Consensus also projects BHP's earnings to grow by 13% by 2026, according to CommSec.
How is BHP managing its challenges?
BHP has also made progress on addressing legacy issues, such as the 2015 Samarco dam disaster in Brazil.
A recent Brazilian court ruling cleared BHP Brasil of criminal liability related to the dam's failure.
While the decision is positive for shareholders, it does not mark the end of legal proceedings, as the company still faces a major class action in the United Kingdom.
The commodity price volatility has been another headwind for BHP shares.
Falling iron ore prices and concerns over Chinese economic growth have weighed heavily on mining stocks in recent months.
China's recent debt package announcement, while extensive, appears to have fallen short of offering the kind of economic stimulus needed to revive a commodity demand.
Unless China introduces more robust measures, the outlook for iron ore and other resources could remain subdued. Iron ore currently trades at US$101.95 per tonne, down from October highs of US$112 per tonne.
Should you consider buying BHP shares now?
Goldman Sachs isn't the only firm that is constructive on the miner. Brokers remain generally bullish on BHP shares. Consensus rates it a buy, with eight brokers currently in that camp.
Bell Potter is one. It highlights the miner's position in copper production and its potential to benefit from further Chinese stimulus.
The firm considers BHP "an attractive investment proposition" which could grow in value in years to come.
Morgans and Morgan Stanley sit alongside their investment banking colleagues, with price targets of $47.90 and $46.85, respectively. Both imply a double-digit upside.
The bottom line on BHP shares
BHP shares will be around for a long time, at least as long as we need mining. But their performance can be cyclical, tied to the mining cycle.
Ongoing investments in growth projects are likely necessary to make it a continued standout in the ASX mining sector. Time will tell how those projects will progress.
In the last 12 months, the BHP share price is down 15%.
