Royal Dutch Shell plc (RDS.A) Stock Is an Absolute Steal Right Now

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Royal Dutch Shell plc (ADR) (NYSE: RDS.A) is off around 10% in the past year. But it’s up 11% in the past 10 months.

Royal Dutch Shell plc (RDS.A) Stock Is an Absolute Steal Right Now

Confused? Well, it’s been a confusing time in the energy patch ever since late 2014 when Saudi Arabia decided it wanted to cut the price of oil on the global market so higher cost producers were squeezed out of the market and The Kingdom could remain the top oil country on the planet.

And the Big Oil players were not immune from the problems. Slow economies also meant that there was reduced demand for oil, even when it cheapened and big importers like China started buying as much oil as they could for their strategic reserves. China may not need the oil now, but it will be on hand to help lower costs as oil prices rise.

And rise they have. Now, Saudi Arabia has stated that it will cut production and hopes to move oil prices into the $50 to $60 range. At the same time, Iran is promising a new 3 million barrels a day so it can recuperate from the sanctions it was under until recently.

But the point is, when Saudi Arabia sets a target price, it usually gets what it wants, since it is the world’s leading producer. The U.S. was actually the No. 1 exporter of gasoline until the Saudis flooded the market.

U.S. oil costs about $50 a barrel to produce, so the U.S. oil patch was in deep trouble when prices were hanging the $30s and $40s. But it looks like those days are over, and now it’s a great time to look to the major integrated oil firms to take advantage of the next leg up in energy prices.

RDS.A Stock Is at the Top of the List

You see, most oil companies don’t really bother to keep the tightest set of books when times are good. They’re looking for more fields, expanding operations, buying smaller firms and hiring all over the world.

When times get tough is when the best of the Big Oil companies jettison unproductive businesses and properties, slashing costs wherever necessary.

Sometimes that means cutting their dividends. And RDS.A has a whopping 7.4% dividend. For a while now, investors were worried that a dividend that size would be unsustainable, but Shell has found a way.

And now that oil is turning around, it’s even safer than before. Plus, when RDS.A bought British Gas last year, it expanded its global natural gas business. And it didn’t take long to bear fruit. Earlier this year, RDS.A announced that it has discovered a massive natural gas field in Egypt, with more potentially to discover.

Natural gas is becoming very popular around the world and the U.S. has been a leading producer. But for countries in Asia, where natural gas is in high demand and they pay premium prices, this discovery could mean much better pricing and access to natural gas.

RDS.A has certainly been beaten up, but the worst is behind it and it’s a bargain at current prices.

Richard Band’s Profitable Investing advisory service helps retirement savers outperform the market without losing a minute of sleep along the way. His straightforward style and low-risk value approach has won seven Best Financial Advisory awards from the Newsletter and Electronic Publishers Foundation.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/10/royal-dutch-shell-plc-rds-a-stock-ipmedia/.

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