Start the conversation
Earlier this week, I dropped the names of three fantastic lithium stocks - two of which are "classic" penny stocks - poised to go much higher on increasing demand for EV and other electric batteries.
Today, we're going to stay in the mining sector, with a stock pick that has a broader focus.
Why the emphasis on miners right now?
Well, the bull market for minerals like lithium is an obvious reason, but of course, there's also inflation to contend with. It's running hotter than it has in decades, and while that can be bad news for tech stocks, it's great for companies like financials, which we've talked about, and hard assets.
If you want to play inflation (and there's really no two ways about that), you've got to play the appreciation of hard assets. That's going to be key to success in the markets in 2022.
And what's harder than a mining company? Not much, as it turns out.
My pick today should pop double digits while it pays you a 9.3%-plus dividend...
This Is One of the Best Miners Out There
BHP Group Ltd. (NYSE: BHP) is a dual-listed company headquartered in Melbourne, Australia. It's the largest miner in the world, and among the top 100 largest public companies operating in the world today.
And this is a huge company - a $140 billion market cap, and eye-popping revenue of $62 billion by the trailing 12 month (TTM). Profit margins are running close to 18.5% right now, and if you've been with me for a while, you know how much I like healthy margins.
BHP ticks all the boxes. It's just a huge, very well run, very well diversified mining company. It extracts petroleum and natural gas, gold and silver, copper, zinc, iron ore, molybdenum, potash, and much more. Virtually everything 21st-century global society wants and needs to run smoothly, BHP pulls out of the ground in copious amounts.
And they do it to the nth degree - BPH has operations in Africa, Australia, North America, the Caribbean, and South America.
BHP is also in the insanely lucrative logistics and transportation business - a great place to be as demand for that kind of capacity surges.
BHP stock is moving up off support, trading at just under $70 right now. This stock was trading near $80 last summer, and I think it easily gets back there. In fact, I think BHP will blow right past $80 on its way to $100, which would put more than 30% in gains in your pocket.
There's a kicker, too: BHP pays people handsomely to own its stock. The forward dividend yield here is above 9.3% - practically unbeatable in this space. You're not going to find a dividend like that on a 70% payout ratio. That in itself is very healthy for a company with this kind of cash flow.
As I said, beating inflation (and profiting from it) is going to be one of the central themes of investing in 2022, but not the only one. Mastering cryptocurrency, playing the metaverse, and, above all, volatility are going to be key to capturing the biggest profits this year has to offer.
We're going after profit potential in places Wall Street's not looking or is flat-out afraid to go - like in a class of stocks that's seen peak, 12-month gains as high as 22,000%.
Keep your eyes peeled for more on my "State of the Markets" address - that will be coming at you next week.
Follow Money Morning on Facebook and Twitter.
About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.
Or to contact Money Morning Customer Service, click here.