BP PLC (NYSE:BP) — BP stock gapped down Friday morning following news that Britain had voted to leave the European Union. Shares closed nearly 5% lower on the day, but this selling could provide traders with an opportunity to pick up shares below my buy under price.
The London-based leading integrated oil and natural gas company has been adversely impacted by lower oil prices. But crude’s rally off its February lows could help this year’s earnings, and the Brexit could actually make BP stock more attractive.
In addition to the lower share price, some analysts have said the Brexit will help British companies like BP and Royal Dutch Shell PLC (NYSE:RDS.A, NYSE: RDS.B) because a falling pound and rising U.S. dollar should lower costs and raise the stocks’ dividend yield. BP pays an annual dividend of $2.40 per share for a current forward yield of more than 7%.
Turning to the chart, after falling from the low $40s in May 2015, BP stock formed a saucer bottom. Support for the saucer is enhanced by a buy signal from my proprietary internal indicator, the Collins-Bollinger Reversal (CBR), in April, and a support line at $31 drawn from the February lows.
Leading up to the Brexit vote, BP stock jumped from support at $31 to just under $35. But when the Brits shocked the markets by deciding to leave the EU, shares opened a down gap on Friday between $34.24 and $33.53.
Further weakness could result in a drop to $31.50, which is my buy point for BP stock. The trading target is $35, which would result in a gain of more than 11%. Investors can also purchase BP stock as a long-term hold for much higher capital gains and its attractive dividend yield, which could become even more attractive if analysts are correct.
