BHP Is A Buy Before Earnings And Here's Why (BHP, BBL)

Diversified mining major BHP Billiton BHP BBL is a buy before the company reports earnings on August 25th and there are plenty of reasons for it. First, manufacturing data is coming back, both in the United States and abroad. While China reported manufacturing numbers that were just above expansion on Saturday night this was seen as a good thing for materials companies in that China is having a soft landing in its economy and there will be no reason for the Chinese government to put further pressure on monetary policy anymore. As a result, the miners were up yesterday, with BHP climbing to $75.19. Secondly, oil prices are back on their way up, having crossed the $81 per barrel mark in today's trading. What separates BHP from other miners such as Rio Tinto RTP or Vale VALE is that it has a major exploration & production business sector and the others do not. Additionally, the new iron ore pricing took into effect this quarter and we already saw what happened with Vale's earnings as a result of the new contracts. For those of you not familiar, the major iron ore producers moved away from an annual contract with their end users to a new quarterly pricing. This move was made to capture the upswings in the price of the commodity throughout the year. My last point for being long BHP is that the joint venture between BHP and Rio Tinto for their iron ore operations is still expected to get done, despite increased regulatory scrutiny from the European Union and Australian government. Once this overhang is released, I would expect a pop in shares of both companies. I would be a buyer of BHP into the companys' earnings report on August 25th and look to add to positions on any weakness as I believe this commodity run is ramping back up again. Disclosure: no positions in any companies mentioned.