BHP Group Ltd (ASX: BHP) shares have enjoyed a strong run over the past year.
With the mining giant now trading around $58, investors may be wondering how much further its shares can climb.
After all, BHP is already one of the world's largest mining companies, and its share price has risen considerably since the start of the year.
But I think there are still reasons to be optimistic about its long-term prospects. So, would I buy at current prices?
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Why I still like BHP
One reason I have confidence in BHP is the quality and scale of its operations.
The company has spent decades building a portfolio of major mining assets across Australia and the Americas, giving it exposure to commodities that are essential to the global economy.
Importantly, many of its operations have attractive cost positions, allowing BHP to remain profitable even when commodity prices come under pressure.
I think this gives the company an advantage over smaller producers that may struggle when market conditions deteriorate.
BHP also has a strong track record of generating cash and investing it back into the business. In FY26, the company's results revealed that it generated US$21.8 billion in operating cash flow, providing substantial financial flexibility to fund new projects, strengthen its balance sheet, and reward shareholders.
And there is still considerable room for growth. Beyond developing new mines, BHP is investing in improving the performance of its existing operations, using technology and more efficient processes to increase productivity.
I like this approach because even relatively modest improvements can have a significant financial impact when applied across a business of BHP's size.
The company is also positioning itself to benefit from several long-term economic trends, including urbanisation, electrification, investment in digital infrastructure, and growing demand for agricultural products.
Of course, expanding production and developing new projects requires considerable capital, and there is always the possibility of delays and cost overruns.
However, I believe BHP has the financial resources and experience to pursue these opportunities while continuing to deliver returns to shareholders.
What about the BHP share price valuation?
While I like the business, I think the BHP share price is starting to reflect plenty of optimism.
At $58, investors are paying a reasonable premium for a company whose earnings can fluctuate significantly depending on commodity prices.
According to current CommSec consensus forecasts, BHP shares are trading on a forward price-to-earnings (P/E) ratio of approximately 17.5 times FY27 earnings and 17.6 times FY28 earnings.
For a cyclical mining company, I wouldn't describe those multiples as cheap. However, analysts expect stronger earnings growth in FY29, which would bring the forward P/E ratio down to approximately 14.3 times.
I think that looks more reasonable, particularly if BHP can continue improving its operations and bringing new production online.
There is also the potential for attractive dividend yields while investors wait. Consensus estimates show that BHP is forecast to pay dividends of $2.07 per share in FY27, $2.10 in FY28, and $2.43 in FY29.
At the current share price, those forecasts represent dividend yields of approximately 3.6%, 3.6%, and 4.2%, respectively.
Risks
The main risk I see is that commodity prices could weaken and undermine those earnings forecasts.
BHP can improve productivity and expand its operations, but it cannot control the prices customers pay for its products.
That's something I would keep in mind when investing at current levels.
Foolish takeaway
I think the BHP share price is decent value at $58, but I wouldn't call it a bargain.
What gives me confidence is the company's ability to keep investing in its operations, improving efficiency, and pursuing new growth opportunities.
With a strong balance sheet, high-quality assets, and exposure to commodities that should remain important for decades, I believe BHP has plenty to offer long-term investors.
At today's price, I would be happy to buy and hold its shares for the next decade.
