Anyone think it’s a good time to get into either one of these? Who’s currently in these plays?
I’ve been in BP since May 2020, and Shell not long after; they weren’t quite rock bottom, but close.
Haven’t been disappointed
But i haven’t put any more money down in these for almost a year i think, beside reinvesting their own dividends in themselves.
Nice do you think it’s still worth getting in to at their current prices?
Definitely cannot give investment advice, but here would be my point of view;
I like my oil exposure, and will increase it over time. You getting in at current prices does not carry the same risks as my position.
Currently oil majors are having a blast with high energy prices, and this will probably last for a little while; but over time it is far more likely that oil prices will stabilise somewhat lower, resulting in lower profits across the board, and less buybacks. This could seriously impact your profitability.
On the upside, the majors are cash machines, and their comfortable dividends may make up for some sluggish capital appreciation.
Longer term, the entirety of the oil industry needs to transition their business model somewhat away from being only oil producer. The majors shouldn’t have too much issues, mostly for being cash rich, and they get to easily divest their less profitable plants to the minors.
The minors on the other hand won’t have such a great time; all of their assets will pretty much be written off to 0 in the coming decade(s), with no buyers for their assets, and they don’t have the same lofty cashflows.
I like oil in general. Overall majors aren’t carrying as much risks as the general opinion depicts it. Minors are on path to devastation.
But current stock prices may be a bit optimistic due to temporary high oil prices, which could affect 2-5y stock performance.
Further, my favourites are BP (as it is somewhat of an underdog in the Majors), Exxon and Shell.
My Shell position is rather small, as its stock tend to be a little overpriced to my liking; Shell is considered to be on the higher quality side.
But I’ve recently sold off ~40% of my Exxon, to capitalize on some 110% profits and reallocate that to better priced assets. Exxon is still quite dear to me, but currently does not stand in my buy list.
Nice thanks for the info!
No advice here, just opinion (as someone who was long BP) is the low hanging fruit was when oil was low and market hated them, 200-300p range. They are making lots of money right now and lots of capital returned to shareholders, but thesis is different. Its if you are happy for not much or even some negative share price action long term but to get dividends while you wait.
As with many things, if you bought when most said the industry was ‘done for’ the risk-reward was there, right now I am not sure if your buying at 400p the risk reward is there compared to other stocks.
This is just my opinion as I hunt for more value plays and lower valuations. Yes on current earnings BP is not highly valued, but just have a look at what it would be if oil at $90, $80 $70, $60 etc then you can make an informed decision. I would still pick BP as best oil long for a UK investor and would buy again if felt opportunity was there.