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BP: Riding The Oil Wave Higher

Apr. 07, 2018 4:15 PM ETBP p.l.c. (BP)58 Comments
Josh Rudnik profile picture
Josh Rudnik


  • BP's share price is trading higher.
  • Its fundamentals are strengthening.
  • I am buying stock in the name.

BP (NYSE:BP) is seeing its share price trade higher as its fundamentals improve. Its share price has traded lower over the last decade due to heightened equity market volatility during the financial crisis, then a collapse in the price of oil. Management has put together a strong, globally diversified portfolio that is leveraged to rising oil prices. As the company's macroeconomic environment improves, expect its share price to similar follow higher.

Price Action

Over the last decade, BP's share price has fallen for a number of reasons. First, equity market declines during the financial crisis, then further European selling during the Greek Debt Crisis, weighed on investor sentiment in the oil giant. Additionally, a collapsing oil price from 2014-2016 led to further declines in the company's share price.

Along the way however, BP's portfolio of assets has continued to deliver steady growth, becoming more efficient and flexible to combat oil price declines. Its share price currently trades at roughly half of its mid-2000's levels, and looks to be forming a bottoming pattern. With BP leveraged to the upside for rising oil prices, even stability at these relatively elevated oil prices should lead to increasing investor sentiment as fundamentals further improve. I am buying stock in the name as its share price benefits from a more bullish macroeconomic environment.

Fundamental Narrative

BP looks like an attractive buy at current levels as its diversified portfolio is generating strong performance amid rising energy prices, leading to organic cash flow generation. The company's current portfolio is diversified globally, with the flexibility to navigate the constant change seen in energy markets, according to recent earnings calls.

In the Upstream, BP is growing its gas in an advantaged oil portfolio, with assets that are low cost or high margin, and is also building on an already deep resource base. Including

This article was written by

Josh Rudnik profile picture
I am currently a portfolio manager at an RIA in Philadelphia with over $1 billion in assets. The portfolio is dedicated towards macro themed positioning with equities, ETFs, fixed income, as well as options and other alternatives. There are opportunities everywhere, both on the long and short side, and I aim to generate absolute returns on an annualized basis for clients. My absolute return portfolio has returned double-digit percentage returns over the last decade regardless of if the market is selling off, or rallying higher with enthusiasm. Relative returns are nice, but at the end of the day, you can't eat relative returns. When the S&P 500 is down 20%, it doesn't necessarily mean you have to be down too. Join my Marketplace service, Absolute Returns, and see how I am positioning my portfolio in real-time, and what trade ideas are coming about daily. I also offer a live chat as part of the service, where questions and ideas can be discussed.

Analyst’s Disclosure: I am/we are long BP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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