As you're likely aware, BHP Group Ltd (ASX: BHP) shares had a year to forget in 2024.
While the S&P/ASX 200 Index (ASX: XJO) gained almost 8% over the year just past, shares in the ASX 200 mining giant tumbled more than 21%. Though you should note that's not including the $2.21 in fully franked dividends eligible investors will have received over this time.
BHP, one of the world's largest miners, produces a range of commodities with a focus on iron ore, copper, coal, potash, and uranium.
Investors were favouring their sell buttons in 2024 amid a slumping iron ore price, driven by concerns of ongoing sluggish Chinese economic growth. BHP's performance was also impacted by inflation, driving significant cost increases over the year.
But with the BHP shares having taken a big hit in 2024, here are four reasons the ASX 200 miner could be set to rebound in 2025.
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Are BHP shares set to outpace the benchmark?
MPC Markets' Mark Gardner has an optimistic outlook for BHP shares in the year ahead
"China is recovering and the race to build artificial intelligence data centres should lift demand for copper, steel and uranium," said Gardner, who has a buy recommendation on the ASX 200 miner (courtesy of The Bull).
Which is the first reason the mining stock could rebound in 2025.
As for the second and third reason, Gardner noted the company's discounted share price and high quality, diversified mining assets.
According to Gardner:
We believe the company is trading at a steep discount. BHP has world-class, low-cost assets. It has a strategic focus on future-facing commodities, and is well positioned to benefit from megatrends, including artificial intelligence data centres, urbanisation, electrification and the clean energy transition.
The company's strong market position in iron ore, coupled with its growing copper and potash businesses provides a balanced portfolio, with exposure to traditional and emerging markets.
And let's not forget the attractive dividends on offer.
Citing a fourth reason BHP shares look set to rebound in 2025, Gardner said, "BHP's disciplined capital allocation, robust balance sheet and commitment to shareholder returns, including a minimum 50% dividend payout ratio, offer attractive value for investors."
He concluded, "Trading at a discount to historical averages, BHP shares are undervalued given the company's growth prospects and operational excellence."
Another bullish assessment
MPC Markets' Gardner isn't alone in is bullish outlook for BHP shares in 2025.
Shaw and Partners senior investment adviser Jed Richards pointed out (quoted by The Australian), "Miners typically have volatile earnings and therefore volatile share prices. I suggest clients buy mining stocks while the share prices are off and BHP is currently suited for this strategy."
According to Richards:
The market is concerned that China's growth is slowing and therefore will require less of BHP's commodities. This theory is not yet a reality and although China have high stockpiles at their ports, they continue to buy our iron ore in record volumes.
BHP has more commodity diversification than the other large miners and this adds a level of protection.
BHP shares are down 2.1% in morning trade on Monday, at $38.9 apiece.
