I think that BHP is set up for a short term drop, but will be a fantastic performer over the next few years.
I am basing this primarily on key statistics, the underlying trend, the analyst’s bias, and the recent price swings.
BHP is a mining company that has become instrumental in supplying companies in the developing world with the iron ore they need for steel, and other various minerals.
A glance at the fundamentals seems to confirm that the underlying trend, i.e. the thirst for minerals in the developing countries, remains strong. BHP is pulling net profit margins above 33%, because of a high price environment for minerals. It has a low debt load, (<30% Debt/Equity), and a high return on equity (44%). What is fascinating is that the stock now has a P/E below 9.
The price has been dropping recently, an effect of a change in the prevailing bias in the markets. Market participants are expecting that the European credit crunch will result in reduced lending to the developing countries. Thus, these countries will not have enough money to continue construction at current rates, and the demand for minerals will die down.
I believe this logic is flawed, because certain Asian countries, like China, now have enough funds to lend internally, so the effect of the European credit crunch there will be minimal. I think that market participants have overcompensated for the European credit crunch.
However, I don't think we have reached the bottom of this price drop. I think that recent price drops are confirming the bias that market participants have set, and this price move will last until a clear resolution to the credit crunch has been reached.
BHP may be an interesting pick to begin researching, and snatch up sometime in the next few weeks. The underlying trend is a multi-year trend, and the price is being affected by a bias that will not last longer than a year.

The underlying trend here is not likely to be affected by the price moves, because the company has enough cash on its balance sheet to finance its own growth, and in fact, buys back its stock aggressively. When a company is a net purchaser of shares, price drops can naturally be corrected by a strong underlying trend, because this gives the company enough cash to put upwards pressure on the price.