Is it irrelevant, or will the Upgrade make the BHP Billiton share price more attractive?

• The chart shows the BHP Billiton share price since late August.
• Investec upgrades BHP Billiton at Buy, maintaining the target price at 1774p.
• Consensus summary: 7 Buys, 20 Holds, 2 Sell; Average target: 1752p (Source: Bloomberg).
• Current share price 1607p (at time of writing).
• 1 Nov: company announced it will return $10.4bn to shareholders, half of which stock buyback (only Australian-listed shares) and half special dividend.
• Accrording to latest analysis from UBS (1 Nov), BHP’s UK investors don’t have to wait long for a share buyback of their own.
• Shares -13.4% from 2018 highs; +15.8% from 2018 lows; +5.5% year-to date
• Source: Bloomberg, FT, Reuters, DJ Newswires

Click to enlarge

Trading BHP Billiton– An Example

Let’s say you think that BHP Billitonshares have upside potential as result of this broker upgrade. You decide to buy exposure to £10,000 worth of BHP Billiton using a CFD, at the current price of 1607p. To do this, you need £2,000.

For the purpose of this example, let’s assume the BHP Billiton share price rises to 1709p October high (+6.3%). Your profit would be £630 from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 4% from the current price. BHP Billiton shares continue their downtrend, they fall 4% and hit your stop-loss. Your loss would be £400.

This is provided for information purposes only. It should not be taken as a recommendation.