A few days ago, I discussed my process for determining whether a large-cap cyclical stock may be worth purchasing during a low point in the cyclical. The three factors of the test that were most important: what are the current profits (if any) at the current low point, how worse are things expected to get, and can get the debt payments get made during current conditions or the worse expected conditions.
BHP Billiton is now trading at the lowest point since 2004. The stock is now in the teens, with the London-listing BBL trading at $19 per share. After hitting a high of $104 in 2011, investors have not been able to get away from this company first enough. Almost every article that I have read on it has an overwhelmingly negative outlook. I understand why people reach these conclusions–this morning, copper just hit a six-year low and the price of oil is around $33 per barrel. These are tough conditions for all commodities.