Should I buy or should I Shell?

Shell has taken its first ever annual loss as pressures to commit to a greener future become too much. The company revenues are down 48% year-on-year due to lower oil prices, but does this dip present an opportunity to buy?

The company lost £16 billion in 2020 following a crash in crude oil prices. Depreciation in the value of oilfields and increasing costs to adapt to a less-polluting energy system have led to profits down a colossal 71% this year. With news that the Anglo-Dutch supermajor saw an 87% loss in the final quarter, no wonder share prices have dropped. 

Chart from Hargreaves Lansdown

Royal Dutch Shell (RDS) has struggled to keep afloat during the pandemic. For the first time this century the company was forced to slash its dividend and its workforce to fight off debt that currently stands at £47 billion. The company hopes that reducing its debt by almost 20% will set a solid entry point for 2021 and allow them to reinstate their dividend value this quarter. Shell’s stock has halved over the past five years, and yet the yield is currently only around 3.9% as a result of their dividend cut. Their yield is much lower than competitors Total and Chevron, which have continued to offer generous dividends despite hits to the market.

Shell manages the largest natural gas supply in the world yet refuses to embrace the switch to a renewable energy that has led other companies, such as SolarEdge to thrive. The Royal Dutch Shell plc is a company based in the Netherlands that explores for crude oil and natural gas worldwide and hope to reach net zero carbon emissions by 2050. But if they fail to embrace the green energy revolution, will they survive?

eToro and easyMarkets state that 75 % of retail investors lose their money when trading CFDs. Trading 212 state that 76 % of retail investors lose their money when trading CFDs. DeGiro provide a detailed ‘The risks of investing’ page here. You should consider whether you can afford to take the high risk of losing your money.

Before we go into whether you should buy, you will need to open an account with a broker to manage your investments. 

Choosing the best online stock broker can make the difference from an easy and exciting new experience to  constant frustration and disappointment. Accessing financial markets through online brokers is easy and inexpensive but there are so many out there tailored to a different sort of customer so choose the right broker that will optimise your user experience and profits. 

If you’re just starting out we recommend eToro and easyMarkets for their easy to use interfaces and fee -free trading!

Buy or Sell?

Overall, RDS is a BUY. Over the past month share prices have dropped 6.85% making the company’s shares on the market at a bargain price. The buy rating has been consistent over the past few months, indicating that the drop in Shell price will not last forever. Get in while you can!

Graphic from CNN Business

Price Prediction

Shell’s share price is expected to rise by 30.7% over the next 12 months following a median target of 49.0. However the price prediction is broad with a range between low and high estimates of roughly $43. 

Graphic from CNN Business

Shell has taken a turn for the worst due to pandemic and oil price drops. Yet this presents a great buying opportunity with a potential 70.7% growth following generous price forecasting. Want to start trading? We recommend eToro and easyMarkets for beginners. 

Published by

Optimising trading success through competition and guidance.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: