BHP Climbs Above 50-Day SMA: Time to Buy the Stock?

BHP Group Limited BHP has reached a significant support level, making it an attractive option for investors from a technical standpoint. Yesterday, the stock broke through its 50-day simple moving average (SMA), signaling a potential short-term bullish trend.

The 50-day SMA is widely tracked by traders as a key support and resistance indicator, often marking the early stages of an uptrend or downtrend. So far this year, BHP stock traded above the 50-day SMA but slipped below it on Friday, but has regained momentum, suggesting a positive shift in sentiment.

BHP Breaks Out Above the 50-Day Moving Average

Image Source: Zacks Investment Research

BHP Stock Outperforms Industry & Sector, Lags Peers

BHP shares have gained 34.7% in the past six months, outperforming the Zacks Mining - Miscellaneous industry’s 27% growth. Over the same period, the Zacks Basic Materials sector has gained 17.9% and the S&P 500 has risen 0.8%.

Meanwhile, iron miners like Rio Tinto Group RIO and Vale S.A VALE have gained 45% and 38.8%, respectively.

Image Source: Zacks Investment Research

So, is it the right time to stock up on shares, or should one book profits? Let’s delve deeper into the company’s fundamentals.

Factors Acting as Tailwinds for BHP Stock

BHP’s Strong Momentum in 1H26 Signals a Solid FY26 Outlook

Iron ore output was 133.8 Mt in the first half of fiscal 2026, up 2% year over year. Production at Western Australia Iron Ore (WAIO) was a record 129.8 Mt (146.6 Mt on a 100% basis). Notably, WAIO has been the lowest-cost iron ore producer globally for more than four years. For fiscal 2026, BHP expects iron ore production of 258-269 Mt, with WAIO contribution at 251-262 Mt (284-296 Mt on a 100% basis). This factors in the planned renewal of Car Dumper 3 (CD3) and the ongoing tie-in activities for Rail Technology Program 1 (RTP1). The company is already halfway through the targeted fiscal 2026 and poised to offset the impact of a typically wet third quarter.

Over the medium term, WAIO production is expected to exceed 305 Mt annually, supported by expanded rail operation capacity unlocked by RTP1 and the Western Ridge Crusher Project. BHP is investing in a sixth car dumper and related infrastructure at Port Hedland.

BHP’s 1H26 Results Up Y/Y on Higher Prices, Cost Control

Revenues increased 11% to $27.9 billion, reflecting higher copper and iron ore prices in the first half of fiscal 2026. Underlying EBITDA increased 25% to $15.5 billion. Copper contributed 51% of the group's underlying EBITDA, increasing to a record $8 billion. Underlying EBITDA margin was 58.4% compared with 51.1% in the comparable period last year.

Disciplined cost control, strong operational performance and higher prices for key commodities led to a 22% year-over-year increase in underlying attributable profit to $6.2 billion.

BHP’s Strong Cash Flow Supports Ongoing Investment

Net operating cash flow increased 13% to $9.4 billion in the first half of fiscal 2026, driven by higher realized copper and iron ore prices. Free cash flow increased 10% to $2.9 billion, after spending $5.3 billion on capital and exploration projects. Capital and exploration spending is budgeted at $11 billion for fiscal 2026 and 2027, averaging $10 billion annually from fiscal 2028 to 2030.

BHP, through a wholly owned subsidiary, has entered into a long-term streaming agreement with Wheaton Precious Metals WPM. Under the agreement, BHP will receive an upfront payment of $4.3 billion for delivering a share of silver produced at the Antamina mine to Wheaton Precious.

Shift Toward Future-Facing Commodities Boosts BHP’s Prospects

To benefit from decarbonization, electrification, population growth and rising living standards in emerging markets, BHP continues to pivot toward commodities such as copper and potash, allocating nearly 70% of its medium-term capital expenditure to these areas.

BHP has achieved 30% growth in copper production in the last four years, and copper production reached 984 kt in the first half of fiscal 2026. The company’s expected copper production is 1.9-2.0 Mt for fiscal 2026.

The company submitted the "Escondida New Concentrator" project to the Environmental Assessment System as part of its ongoing efforts to grow the business. The new concentrator, with a likely investment of $4.4-$5.9 billion, will replace the historic Los Colorados plant, which is approaching the end of its operating life. BHP plans to install new capacity to produce 220 – 260 kt of copper annually.

Resolution Copper, a joint venture owned by BHP (45%) and Rio Tinto (55%), and the United States Forest Service (USFS) have announced the completion of a Federal land exchange. This milestone enables the next phase of technical work and development planning for the Resolution Copper project, which is one of the most significant undeveloped copper resources in the United States.

BHP is also advancing the Jansen Stage 1 potash project, a large-scale, low-cost, high-grade resource with a mine life exceeding 100 years. BHP is working toward its first production by mid-2027. Once operational, Jansen Stage 1 is expected to produce 4.35 million tons of potash annually. Stage 2 of the project has been 14% completed and is expected to deliver its first production in fiscal 2031.

These investments will transform Jansen into one of the world’s largest potash mines, doubling production capacity to 8.5 million tons per year, positioning BHP as a major global producer of potash by the end of the decade.

Supportive Price Trends to Favor BHP

Iron ore prices are currently around $105 per ton, up 3% in a year. Going forward, rising steel demand, fueled by strong economic development and urbanization, will lead to high demand for iron ore and support prices. Copper futures are up 15% in a year and are around $5.70 per pound. Copper has gained amid expectations of a tightening in global supply due to high demand. The long-term outlook for copper is positive, as demand is expected to grow, driven by electric vehicles, renewable energy and infrastructure investments, while supply remains tight.

BHP’s Industry-Leading Dividend Yield, Returns Add to Appeal

The company’s current dividend yield of 4.11% is higher than the industry’s 2.99% and the S&P 500’s 1.13%.

BHP’s return on equity, a profitability measure of how prudently it is utilizing its shareholders’ funds, is 17.7%, way higher than the industry’s average of 1.29%.

BHP Trades at a Premium

BHP is trading at a forward 12-month price/sales multiple of 3.27X, a significant premium to the industry’s 1.43X.

Image Source: Zacks Investment Research

The stock is also expensive compared with other iron miners like Rio Tinto Group and Vale, which are trading at 1.87X and 1.65X, respectively.

BHP’s Earnings Estimates Indicate Y/Y Growth, Trend Upward

The Zacks Consensus Estimate for BHP’s fiscal 2026 earnings is pegged at $4.93 per share, indicating 35.4% year-over-year growth. The estimate for fiscal 2027 is $5.08, suggesting a 3.2% rise.

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for fiscal 2025 and 2026 has moved north over the past 90 days.

Image Source: Zacks Investment Research

What Should Investors do Now?

BHP presents a compelling mix of strong technical momentum and solid fundamentals. The stock’s move above its 50-day SMA points to improving near-term sentiment, while robust operational performance, rising commodity prices and disciplined cost control continue to drive earnings growth. The company’s strategic pivot toward copper and potash, backed by a well-funded project pipeline, positions it to benefit from long-term structural trends like electrification and decarbonization. Strong cash flows, consistent capital investment and an attractive dividend further enhance its investment appeal.

While the stock trades at a premium, this appears justified given its superior asset quality, profitability and growth visibility. With upward-trending earnings estimates and a supportive commodity backdrop, BHP remains a solid pick for investors. BHP currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

5 Stocks Set to Double

Each was handpicked by a Zacks expert as the favorite stock to gain +100% or more in the months ahead. They include

Stock #1: A Disruptive Force with Notable Growth and Resilience

Stock #2: Bullish Signs Signaling to Buy the Dip

Stock #3: One of the Most Compelling Investments in the Market

Stock #4: Leader In a Red-Hot Industry Poised for Growth

Stock #5: Modern Omni-Channel Platform Coiled to Spring

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. While not all picks can be winners, previous recommendations have soared +171%, +209% and +232%.

See Our Newest 5 Stocks Set to Double Picks >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

BHP Group Limited Sponsored ADR (BHP): Free Stock Analysis Report

VALE S.A. (VALE): Free Stock Analysis Report

Rio Tinto PLC (RIO): Free Stock Analysis Report

Wheaton Precious Metals Corp. (WPM): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research