Royal Dutch Shell is Retrenching: Tim...
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Sep
26
Jonathan Yates
Royal Dutch Shell is Retrenching: Time to Buy?
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As detailed in another article on this site, Repsol (PINK: REPPY), the Spanish oil giant, is looking to spend up to $10 billion to acquire energy assets in North America.  At the same time however, Royal Dutch Shell (NYSE: RDS-A), the Dutch oil giant, has been selling off of its North American energy holdings as the company gets “leaner and meaner.”   For long term investors, Royal Dutch Shell has much to offer, especially as a more efficient multi-national conglomerate.

While many other major oil firms are up in the double digits for 2013, it has not been good year for Royal Dutch Shell.  For the year, Royal Dutch Shell is higher by only 0.57%.  By contrast, ConocoPhillips (NYSE: COP) is up more than 25% for 2013.  Over the same period, Chevron (NYSE: CVX) has risen by nearly 18%.

Due to disappointing earnings, Royal Dutch Shell is down for the most recent week of market action.

That makes it more compelling as a long term investment.  Buyers can now acquire shares of Royal Dutch Shell at a discount.  The lower price also makes the dividend yield higher.  At present, the dividend yield for Royal Dutch Shell is more than 5%.  By contrast, the dividend yield for ConocoPhillips is 3.92%. For Chevron, the dividend yield is 3.22%.

Royal Dutch Shell is also undervalued at its present price level.

The price-to-sales ratio for Royal Dutch Shell is just 0.47.  That means that every dollar of sales is going at less than half value in the stock price.  The price-to-sales ratio for Chevron is 1.02.  For ConocoPhillips, the price-to-sales ratio is 1.44.

Many other articles on this site have reviewed the positive aspects of long term investing in oil companies.  These can range from prominent blue chips such as Royal Dutch Shell, Chevron, and ConocoPhillips to promising small caps such as Americas Petrogras (TSX: BOE) and Octagon 88 (OTCBB: OCTX).  There are no fuels sources to challenge oil and natural gas in the future.  That is why investors should feel bullish when buying shares of Americas Petrogas, Octagon 88, Chevron, or ConocoPhillips.  That is why Repsol is looking to buy in the billions.  It is also way Royal Dutch Shell should be a profitable long term investment.

 



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