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.