3 reasons to buy BHP shares for 2027

I take a closer look at what could keep this mining giant growing well beyond 2027.

| More on:

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

BHP Group Ltd (ASX: BHP) is one of the ASX shares I would be happy to own heading into 2027.

The mining giant already has a collection of large, high-quality assets, but I think there are also some interesting growth opportunities ahead.

Here are three reasons I would buy BHP shares.

A man and woman sit next to each other looking at each other and feeling excited and surprised after reading good news about their shares on a laptop.

Image source: Getty Images

Copper could become increasingly important

Copper is probably the part of BHP I am most interested in over the next decade.

The metal is needed across electricity networks, renewable energy, electric vehicles, data centres, and a wide range of other infrastructure.

At the same time, bringing major new copper mines into production can take many years.

That puts established producers such as BHP in a strong position.

The company already has significant copper operations and the expertise to invest further as demand grows. I think that could make copper a much bigger contributor to BHP over time.

Commodity prices will always move around, but I like owning an established producer rather than trying to guess which early-stage copper project might eventually succeed.

BHP is still investing for the future

I also like that BHP is not relying solely on its existing mines.

The company continues to put capital into projects that could support production for decades.

Its Jansen potash development in Canada is one example. Potash is used in fertiliser, giving BHP exposure to a market driven by global food production rather than the same forces that influence iron ore or copper.

For me, this is an interesting addition to the portfolio.

BHP already has enormous exposure to metals and minerals used in construction and industrial activity. Building a meaningful potash business could give it another source of earnings over the long term.

Major projects come with execution risks and require substantial investment before they begin generating returns.

But BHP has the financial strength to pursue opportunities of this scale, which is one of the reasons I am comfortable taking a long-term view.

Scale gives BHP plenty of options

The final reason is BHP's existing strength.

Its large iron ore operations can generate substantial cash flow when market conditions are supportive, while the company also has exposure to copper and other commodities.

That cash gives management choices.

BHP can reinvest in existing assets, develop new projects, pursue acquisitions when opportunities arise, strengthen the balance sheet, or return money to shareholders.

I think that flexibility is particularly valuable in mining, where commodity cycles can create opportunities for companies with the financial capacity to keep investing when conditions become more difficult.

There will still be weaker periods for commodity prices, and BHP's earnings and dividends will move around with them.

But I think its scale puts the company in a strong position to keep building the business through those cycles.

Foolish takeaway

BHP is the type of share I would be comfortable buying heading into 2027 and then leaving alone for years.

I like the growing copper opportunity, investment in new areas such as potash, and the financial strength of the existing business.

There will inevitably be ups and downs along the way, but I think BHP has plenty of ways to be a bigger and stronger company a decade from now.

Motley Fool contributor Grace Alvino 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 recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

Two workers working with a large copper coil in a factory.
Resources Shares

Capstone Copper shares take off on $542 million divestment news

Investors are piling into Capstone Copper shares on Tuesday.

Read more »

A small child in a sandpit holds a handful of sand above his head and lets it trickle through his fingers.
Materials Shares

Guess why this ASX stock is jumping 4% on Friday?

This beaten-down ASX stock is finally moving higher.

Read more »

A miniature moulded model of a man bent over with a pick stands behind a sign that has lithium's scientific abbreviation 'Li', with the word lithium underneath it against a sparse bland background.
Resources Shares

Could this evolving development smash ASX lithium shares like Liontown, Mineral Resources and PLS?

Buying ASX lithium shares? You’ll want to keep reading…

Read more »

Three people at a building site discussing a plan whilst eating.
Materials Shares

James Hardie says it doesn't need a US housing recovery. Can it prove it?

Investors are watching whether growth can continue.

Read more »

Scared, wide-eyed man in pink t-shirt with hands covering mouth.
Materials Shares

Down 6% today: What's going on with the James Hardie share price?

Can the shares keep tumbling?

Read more »

A mature age woman with a groovy short haircut and glasses, sits at her computer, pen in hand thinking about information she is seeing on the screen.
Materials Shares

IperionX validates GenX™ titanium production: Major efficiency gains

IperionX has validated its GenX™ platform, delivering major improvements in titanium production efficiency and paving the way for industrial-scale development.

Read more »

Buy, hold, and sell ratings written on signs on a wooden pole.
Broker Notes

PLS shares have soared 107% in a year! Is the ASX 200 lithium stock now a buy, hold or sell?

A top analyst provides his outlook for the rocketing PLS share price.

Read more »

Couple on their laptop in their home kitchen.
Technology Shares

$10,000 invested in DroneShield and Core Lithium shares 3 years ago is now worth…

Was I better off buying $10,000 worth of DroneShield shares or Core Lithium shares in September 2023?

Read more »