Has BHP Billiton Limited (ADR) (BHP) Become the Perfect Stock? – Rio Tinto plc (ADR) (RIO), Freeport-McMoRan Copper & Gold Inc. (FCX)

Yet BHP Billiton Limited (ADR) (NYSE:BHP) managed to avoid some of the miscues that its competitors made simply by not trying to get any larger than it already is. By contrast, Rio Tinto plc (ADR) (NYSE:RIO)‘s acquisition of Alcan seemed like a wise buy at the time, but the weakness in the aluminum market has forced the company to take massive impairment charges. Similarly, ill-advised acquisition activity from Cliffs Natural Resources Inc. (NYSE:CLF) led it to slash its dividend by more than 75% last month, with its concentration on met-coal and iron ore weighing on the company’s results. Because of its prudent capital management, BHP was able to raise its dividend last month.

Another thing that has helped BHP shine is its energy exposure. With substantial oil and natural gas assets, BHP isn’t as vulnerable to the whims of the metals markets as more concentrated miners. The strategy has been successful enough to inspire Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) to take the same tack with its plans to acquire two energy-related companies.

For BHP Billiton Limited (ADR) (NYSE:BHP) to improve, it needs a global recovery in metals and energy prices to help it boost its revenue. Until then, BHP can take advantage of its superior capital position to grab up assets on the cheap and put itself in better position to reap profits during the next cyclical upturn.

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No stock is a sure thing, but some stocks are a lot closer to perfect than others. By looking for the perfect stock, you’ll go a long way toward improving your investing prowess and learning how to separate out the best investments from the rest.

The article Has BHP Billiton Become the Perfect Stock? originally appeared on Fool.com.

Fool contributor Dan Caplinger and The Motley Fool own shares of Freeport-McMoRan Copper & Gold.

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