The incoming Biden presidential administration plans to spend $2 trillion on its proposed infrastructure plan that is designed to address climate change while building a new, eco-friendly infrastructure — ranging from transportation to energy. Biden’s policies are expected to incentivize the private sector to accelerate plans to cut carbon emissions and by so doing boost metals prices in the coming months…
According to Moody’s, Biden’s plan — which includes investments in education, social safety net, healthcare, clean energy, and infrastructure — would result in average annual gross domestic product (GDP) growth of 4.2% between 2020 and 2024, and 2.9% between 2020 and 2030. The plan is also expected to achieve an unemployment rate of 4.1% by 2022, significantly lower than the prevailing 6.9% rate.
BHP Group (BHP – Get Rating), Caterpillar Inc. (CAT – Get Rating), Rio Tinto Group (RIO – Get Rating) and United States Steel Corporation (X – Get Rating) have started to see modest improvements in their production volumes amid the growing optimism around the potential of Biden’s proposals. With an expected V-shaped economic recovery this year, these stocks should be solid bets right now we think.
BHP Group (BHP – Get Rating)
BHP is a global resources company and producer of various commodities, including iron ore, metallurgical coal, copper, and uranium. Its businesses include Minerals Australia, Minerals Americas, Petroleum, and Marketing. The Company manages product distribution through its global logistics chain, including freight and pipeline transportation.
Last November BHP completed the acquisition of an additional working interest in Shenzi from Hess Corporation (Hess) for US$505 million, bringing its total interest to 72%. The acquisition is consistent with its strategy of targeting counter-cyclical acquisitions in high-quality producing assets and will add more than approximately 11,000 barrels of oil equivalent production per day.
Earlier this month, BHP and Toyota Australia entered a partnership for a Light Electric Vehicle trial to reduce the emissions intensity of its light vehicle fleet. This partnership will reduce BHP’s dependence on diesel and will help the company achieve its medium-term target of reducing operational emissions by 30% by 2030.
Despite supply chain disruptions, BHP has continued to operate through the pandemic and deliver strong results. The company has started its latest financial year with a strong first quarter of safety and production performance driven by solid results in metallurgical coal and iron ore. Total metallurgical coal production has increased 4% year-over-year to 10 million tons in the first quarter ended September 30, 2020. Its total iron ore production has risen 8% from the year-ago to 66 million tons over the same period.
Analysts expect BHP’s EPS to grow at a rate of 5.3% per year over the next five years. The stock has gained 40% over the past six months.
How does BHP stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
B for Peer Grade
A for Industry Rank
A for Overall POWR Rating
The stock is also ranked #1 of 40 stocks in the Industrial – Metals Industry.
Caterpillar Inc. (CAT – Get Rating)
CAT is a leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The Company operates through five segments: Construction Industries, Resource Industries, Energy & Transportation, Financial Products, and other operating segments.
CAT signed an agreement to acquire the Oil & Gas Division of the Weir Group PLC in October for $405 million in cash. The acquisition is in sync with CAT’s strategy to invest for long-term, profitable growth and will expand its offerings to one of the broadest product lines in the well service industry.
In November, CAT was…
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