Shares in Shell are dirt cheap! Here’s what I’d do now

July 5, 2021 0 Comments

first_img I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Shares in Shell are dirt cheap! Here’s what I’d do now The Royal Dutch Shell (LSE: RDSB) share price has plunged in value over the past 12 months. Including dividends to investors, the stock has declined 21% over the past year. That suggests it’s underperformed the FTSE 100 by 20% over this time frame.The sell-off has only accelerated in recent weeks. Over the past month, shares in the oil major have declined by nearly 11%, underperforming the UK’s leading blue-chip index by 4%.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Investor concernsThere are a handful of reasons why this dividend champion has lagged the market recently. First off, falling oil prices have weighed on Shell’s earnings. According to recent trading updates from the company, profits dropped by more than 50% in the fourth quarter of 2019. This decline forced management to slow the pace of the group’s share buyback policy and put further cash returns at risk.Unfortunately, it doesn’t look as if the business is going to get any relief at any time soon. Oil prices have continued to trend downwards since the beginning of 2020.What’s more, the coronavirus has sent shockwaves around the global economy. As yet, it’s not clear what impact this will have on global oil demand. But initial indications suggest demand has slumped, and that’s terrible news for hydrocarbon produces.Green energyAs well as falling oil prices and demand disruption, Shell is also under pressure from investors to increase its green energy spending. The company says it’s devoting around 10% of its annual capital spending budget to green projects. However, some analysts have speculated this might not be enough.As well as this outlay, Shell is continuing to spend tens of billions of dollars every year on new hydrocarbon projects. There are growing fears the group could be throwing this money away as the world moves away from fossil fuels.These worries are weighing on the stock price. Pressure from activists to get investment managers to divest fossil fuel holdings could also be having an impact.All of the above have contributed to Shell’s recent share price decline. However, this could be an excellent opportunity for long-term income investors to buy a share of this global energy champion.Long-term potentialWhile demand concerns are worrying, they’re likely to be temporary. When the global economy roars back to life, oil demand and the oil price should rise. On top of this, while there’s a genuine risk that Shell could end up owning billions of dollars of stranded assets, management seems to be taking action to minimise the risk of losses for investors.Therefore, from a long-term perspective, Shell’s outlook doesn’t look as dismal as it does today. On top of this, right now you can snap up shares in the oil giant for just 9.2 times earnings. That suggests the stock offers a margin of safety at current levels.The shares also offer a dividend yield of 8.5%, nearly double the FTSE 100’s, suggesting investors will be paid to wait for the stock to recover. Therefore, now could be a great time to take advantage of the market’s short-term outlook and buy Shell.  Simply click below to discover how you can take advantage of this. Image source: Getty Images Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Rupert Hargreaves | Wednesday, 4th March, 2020 | More on: RDSB Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee.center_img Enter Your Email Address I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. “This Stock Could Be Like Buying Amazon in 1997” Our 6 ‘Best Buys Now’ Shares Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. See all posts by Rupert Hargreaveslast_img

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