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Royal Dutch Shell PLC (B)RDS.BTOP PICKNov 11, 2016Stock price when the opinion was issued
As of Jan 28, 2022. Market Open.
The ESG movement is affecting stocks like RDS. Was pulled into the courts by activists. Many large companies have on going lawsuits and are shared in quarterly reports. It's not too big of an issue. They are transitioning into a renewable company with Hydrogen and wind farms. Big oil will be a natural beneficiaries of renewables. The dividend is sustainable and growth outlook is good. Oil is also a recovery trade.
Fell to book value, but jumped on Pfizer announcement. Intrinsic value is 60% higher than current value. Fairly indifferent balance sheet. If it can break above $31, could easily go as high as $42. No yield.
Pays over a 7% yield. All oil stocks have been hammered, but it made a good deal when it bought British Gas five years ago. They're now an LNG company more than oil. Gas is the cleanest carbon fuel. Last Friday, oil stocks bottomed, though the stocks are gushing cash. Oil will stick around for another 15-20 years. So, these stocks are worth looking at unless you don't care for carbon.
This is a call on higher energy prices. Super majors have done really well since the collapse of the oil price by cutting costs and CapX. This should hit cash or break even some time next year. Any modest upside in oil prices over time, will lead to higher dividends. A multiyear story, but will have some upside. Dividend yield of 7.19%. (Analysts’ price target is $62.70.)