What's new? There's a clear disconnect between the sharemarket performance of companies that produce tangible goods and those that do not. This is particularly evident when one examines large resources companies and those in the financial services sector - the former lean to earnings growth, the latter face considerable headwinds in the years ahead.

Highlighting this are the robust third-quarter results from diversified mining giant BHP Billiton. Pleasingly for its chief executive officer, Marius Kloppers, BHP's standout performance came from its iron ore division. Iron ore operations are the primary battleground between BHP and Rio in the merger drama.

BHP claimed victory in the latest skirmish, trumping Rio's 16 per cent iron ore growth with 22 per cent for the quarter. It should be noted, though, that BHP produces far less of the material than Rio in absolute terms, making its growth rate easier to achieve.

Iron ore is the commodity of the moment. This is in large part driven by China's insatiable steel mills and massive industrialisation. As a result, both spot and contract prices are at all-time highs and similar price strength is evident across much of BHP's product range.

The outlook Continued commodity price strength is central to BHP's outlook and, indeed, the resources sector in general. Ongoing growth in China and, to a lesser extent, India is paramount.

It would be naive to suggest that a slowing US economy will have no impact on the growth of these regions.

Yet both countries have significantly strengthened their internal economies. As such, they have an enhanced capacity to maintain momentum in the face of a flagging US economy, albeit at a potentially slower pace.

As a result, while the market tends to view BHP's earnings as being at a cyclical high, the prospect of continued commodity price strength gives further earnings upside.

Price Investor enthusiasm for BHP began to build early last year, lifting the stock to a record high of $47.70 in October. However, in the months following, the stock has largely been contained within a range of between $30 and $40.

Early last month the stock broke through $40, returning focus to October's all-time high.

A pause for consolidation is likely but, given the strength of the recent rally, any price correction is likely to prove relatively shallow.

Worth buying? From a valuation perspective, the mining giant continues to represent good long-term value. It currently trades on a consensus 2009 price-to-earnings ratio of about 11 times.

With commodities firmly entrenched in a bull market, the stock gives investors an attractive risk-reward profile over the medium to longer term.