International Stocks to Buy: BP (BP)
Country: United Kingdom
Forward P/E Ratio: 12
I’ll start with oil supermajor BP Plc (ADR) (NYSE:BP). BP’s relationship with the U.S. of A is, shall we say, “complicated” following the Deepwater Horizon oil spill. The spill caused billions of dollars of damage to the Gulf of Mexico coast and made BP into something of a pariah among Americans.
But in the six years that have passed, BP has slowly waded through the legal and regulatory mess and has emerged as a viable, if not smaller, energy major. The lingering effects of the oil spill has caused BP stock to trade at a discount to its supermajor peers, but as time passes that discount should continue to narrow.
Today, BP trades at prices it first saw in the mid-1990s. It trades for 12 times next year’s expected earnings and at a dividend yield of 7%. As a point of comparison, U.S. supermajor Exxon Mobil Corporation (NYSE:XOM) trades for nearly 20 times expected earnings and yields 3.5%.
Starting at these prices, I would expect BP to crush its American competition.