The company, with a market cap of $168 billion, mines and markets aluminum, coal, copper, iron ore, manganese, nickel, silver, and uranium. More importantly perhaps, apart from its slightly smaller peers, BHP Billiton Limited (ADR) (NYSE:BHP) has become a major global oil and gas operator.
As BHP Billiton Limited (ADR) (NYSE:BHP)’s website notes, its primary petroleum operations are directed toward “largely proven basins, such as the U.S. Gulf of Mexico, Australia, and the South China Sea.” Beyond that, “We also have a range of promising prospects in the Philippines, India, Trinidad and Tobago, Algeria, Pakistan, and Malaysia.”
Two years ago, BHP Billiton Limited (ADR) (NYSE:BHP) paid $12.1 billion in cash to acquire Petrohawk Energy, a leader in the Haynesville shale and the first company to drill a successful well in the prolific Eagle Ford shale.
At 18.3 times, BHP Billiton Limited (ADR) (NYSE:BHP)’s forward P/E ratio is substantially higher than Vale SA (ADR) (NYSE:VALE)’s and Rio Tinto plc (ADR) (NYSE:RIO)’s. At the same time, its 3.60% forward dividend yield trails both the other companies.
Freeport’s new additions
Finally, BHP Billiton Limited (ADR) (NYSE:BHP) isn’t the only major mining company that concurrently includes the potential benefits of oil and gas operations. As of last month, Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX), the world’s largest publicly traded copper producer, completed the acquisitions — for a total near $20 billion, including debt assumptions — of Plains Exploration and Production Company and Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) Exploration.
In the process, Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) added domestic petroleum operations in the Gulf of Mexico, along the Gulf Coast (including the Eagle Ford), in California, and in the Rocky Mountain region. Its mining operations continue occur in North and South America, Indonesia, and the Democratic Republic of Congo.
When announced in December, the acquisitions didn’t sit well with investors, including yours truly. But as the skepticism erodes, it appears likely that Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX)’s current 7.80 times forward P/E, its 0.50 PEG ratio, its 30% operating margin, and its 4.20% indicated forward yield will have signaled another undervalued mining-energy combo company.
Foolish bottom line
Admittedly, the world’s economy continues to struggle. And I’m admittedly less enthusiastic about the U.S. “recovery” than are many other economists. Nevertheless, given the metrics of the above-mentioned companies, it’s difficult to ascertain how any of the foursome represent a better sell than a buy.
The article A Dirt-Cheap Mining Twosome — and Their Pals originally appeared on Fool.com is written by David Smith.
Fool contributor David Smith owns shares of Freeport-McMoRan Copper & Gold. The Motley Fool owns shares of Companhia Vale Ads and Freeport-McMoRan Copper & Gold.
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