BHP Group Ltd (ASX: BHP) shares have gotten walloped in the early months of the new Donald Trump presidency.
Now, the first month of Trump's return to the White House saw a modest uptick for the S&P/ASX 200 Index (ASX: XJO) mining giant. That came amid a 7% increase in the iron ore price to around US$107 per tonne by late February. While copper plays a growing role, iron ore still accounts for 63% of BHP's earnings.
On 21 February, BHP stock closed at $41.26 a share.
But by last Wednesday, 9 April, with the iron ore price back below US$98 per tonne, BHP shares had sunk to $34.16, down a painful 17.2%.
Last Wednesday, by the way, looks to have been an opportune time to start buying the dip on the ASX 200 miner.
In morning trade on Monday, shares are up 2.5% at $36.31 apiece. That's up 6.3% since Wednesday's close.
And amid ongoing geopolitical uncertainty fuelled by the Trump tariffs and further potential market disruptions ahead, Northcape Capital's Paul Parsons believes investors would do well to consider adding BHP to their portfolios.
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BHP shares enjoy top margins
Parsons, the manager of Northcape Capital's Australian equities strategies, said he's been buying sold off ASX stocks that he believes have few downside risks (courtesy of The Australian Financial Review).
Among them he named BHP shares and hearings solutions provider Cochlear Ltd (ASX: COH).
"Those aren't the stocks the markets have liked because they're exposed to global trade. Both have gross operating margins well over 50%," he said.
"BHP is the highest profit margin producer. It's the best place to survive as conditions get worse, but will also participate in any rebound," Parsons added.
Indeed, in BHP's recent half-year results, BHP confirmed that its Western Australia Iron Ore (WAIO) division was once more the world's lowest-cost operation for the steel-making metal.
"For five years WAIO has been the lowest cost major iron ore producer globally. Despite average inflation of 3.4% across Australia, WAIO maintained its leading position with a C1 unit cost of US$17.50 per tonne," BHP noted.
Atop potential share price gains, BHP shares also trade on a fully franked 5.2% trailing dividend yield.
The case to hold tight
Not everyone is convinced that now is the best time to buy more BHP shares.
Fairmont Equities' Michael Gable, for example, has a hold recommendation on the ASX 200 mining stock (courtesy of The Bull).
"The global miner's share price has been smashed in the past 15 months. BHP was trading near $50 a share in January 2024. It was recently trading below $35," said Gable.
He added:
In our view, there's a distinct possibility funds will flow into undervalued resource stocks when market volatility subsides.
We expect investors to be attracted to companies with diversified and quality assets that generate reliable revenue and earnings at the expense of technology stocks, which are harder to value in an uncertain world.
