Energy Business

Will Oil Explode Higher After the Colonial Pipeline Cyberattack? Buy 4 Integrated Energy Giants Now.

Royal Dutch Shell

This is a top international play for investors looking to add energy exposure and is yet another company that posted solid results. Royal Dutch Shell PLC (NYSE: RDS-A) operates as an independent oil and gas company worldwide through its Upstream and Downstream segments. The company explores for and extracts crude oil, natural gas and natural gas liquids.

Shell also converts natural gas to liquids to provide fuels and other products; markets and trades crude oil and natural gas; transports oil; liquefies and transports gas; extracts bitumen from mined oil sands and converts it to synthetic crude oil; and generates electricity from wind energy.

In addition, the company engages in the conversion of crude oil into a range of refined products, including gasoline, diesel, heating oil, aviation fuel, marine fuel, liquefied natural gas for transport, lubricants, bitumen and sulphur; production and sale of petrochemicals for industrial customers; refining; trading and supply; pipelines and marketing; and alternative energy businesses.

BofA Securities remains bullish and noted this when earnings were released:

We minimally fine-tune our above-consensus estimates, leave our price target unchanged with >40% upside and reiterate our Buy rating. First quarter results again crowned the company as the cash flow leader – which we expect to result in buybacks of $2.5 billion in the second half of 2021 and $5 billion in 2022. We believe Royal Dutsche Shell remains significantly undervalued at 16% free-cash-flow yield 2021 estimated pricing in $40 per barrel long-term Brent oil prices.

Investors in Royal Dutch Shell stock receive a 2.83% dividend. The BofA Securities price objective of $52 is near the $52.80 consensus figure. The stock ended Monday at $40.03 per share.

The cybersecurity hack, from a timing standpoint, is brutal. With air travel climbing and the busy summer driving season right around the corner, consumers can bet on higher prices at the pump and maybe more expensive airline tickets. That noted, with dependable dividends and long histories of market dominance, all these stocks make good sense for growth and income investors looking to add energy, but somewhat wary due to the big run-up in oil pricing over the past year.