Opinions
Gavin Graham
Royal Dutch Shell PLC (B)
RDS.B-N
WEAK BUY
Mar 04, 2020
$45.650
Stock price when the opinion was issued
Energy
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BUY
Half of the company benefits from strong oil prices and half benefits from weak oil prices. They are among the largest investors in the world in green energy. They are re-engineering themselves and will be a leader in renewable energy over the next 30 years starting right now. It is a reasonable defensive place to be.
Energy
HOLD
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.
Energy
TOP PICK
If you looked at what happened during Covid was the sell-off in energy. Half the world is still at home. When we start to go back to work, travel, etc there will be a demand for carbon. A recovery trade. The untold story is their transition into hydrogen and renewables. They have cash to continue growing this business. Longer term, they have cut their dividend just once since WW2, which was last year. A solid company. (Analysts’ price target is $55.86)
Energy
COMMENT
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.
Energy
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.