The oil crisis is over. A crisis that captured the attention of all of America and the world for weeks has now fizzled into oblivion. BP's stock (NYSE:BP) on the other hand is still licking it's wounds. While licking it's wounds, the stock has also been on a stealth road to recovery just like the oil crisis itself.
If you look at the range the stock was trading at before the crisis, BP is still missing almost $60 billion of market capitalization. Now that the crisis is over and the liabilities are being tallied, I will tell you why our research indicates that this may be a medium to long term investor opportunity to buy a great company.
First of all, the leak was a very difficult problem to solve, and they solved it. Yes, it took longer than all of us non-experts wanted, but, it did get solved. They stopped the leak. I travelled down to the Louisiana Gulf region a couple of weeks after the leak was stopped and ventured out into the marsh and gulf of mexico. Guess what was missing? Oil. There was no oil in the water. There was no oil on the beach. I saw porpoises and pelicans frolicking in the water. What was missing that day was speckled trout, we got skunked on our fishing trip.
Fishing problems aside, an insider at one of the leading insurance services companies processing claims for BP says he is getting more possible fraud than legitimate claims and legitimate claims are trailing off big time. It seems the damage is not as severe as everyone assumed. In addition, I had conversations with many of the restaurants, bait shops, and hotels and they all said the same thing. They are suffering not because they ever saw one blob of oil, but because the media panicked everyone. Good job media.
My opinion is that BP has gone above and beyond the call of duty helping the people that were impacted by the oil leak. Now, it is time to get back to work. Time to put this behind us. We think that it is just a matter of time before the stock does the same thing.
Technically, after forming a V shaped bottom in late June/ early July, BP has been in a steady uptrend with only one significant pullback. Since August, BP has been steadily bouncing off its moving average (many periods) with a slow but steady uptrend. While this has been true of the general market also, this is only one of a few metrics that show why this may be a great long opportunity.
Finally, when BP gets through with it's drilling contractors and other oil service's firms that share liability in this accident, the stock might just correct up as quickly as it corrected down. Combine that with a perfect storm of high demand and high oil prices and we think this may be a great long opportunity. We also expect BP to announce the return of their dividend at some point, maybe quicker than everyone expects.
Click Here for Interactive BP Chart.
|52 wk Low||26.75|
|52 wk High||62.38|
Disclosure: Long BP