The BP share price has moved sideways this week, helped by the overall strength of crude oil prices. The shares are trading at 300p, which was slightly above last week’s low of 286p. Other oil supermajors like Royal Dutch Shell, ExxonMobil, and Chevron have also tilted upwards.
Is BP a good investment?
BP is one of the biggest oil and gas companies in the world. The firm has a market capitalization of more than $81 billion, making it the biggest UK oil company. The firm generated more than $180 billion in revenue in 2020 in spite of the coronavirus pandemic. This was the lowest annual revenue in about 16 years. Its peak revenue happened in 2013 when it made more than $379 billion.
BP has done a lot in the past few months. For one, it has managed to dramatically cut down its debt by selling assets and cutting more costs. By lowering its debt, BP has pledged to increase its dividend payouts to investors provided that oil prices remain at these elevated levels.
At the same time, the company has announced new initiatives to offset its carbon emissions. The goal is to attract investors who are sceptical about whether big oil companies can transition to clean energy. For example, BP has invested in companies that provide charging ports. It has also invested in wind farms and other “cleab” energy products.
Still, it looks like investors are not pleased with BP and Royal Dutch Shell. While the BP share price has risen by just 10% in the past 12 months, the Vanguard Energy ETF has risen by about 40% on the same period. Other supermajors like Exxon and Chevron have also jumped by more than 30%.
So, is BP a good investment? Some analysts believe that BP is a good company to invest in especially among people focused on dividends. Besides, it has a dividend yield of about 5.54%, which is above that of the FTSE 100 average. This payout is also safe considering that the company generates substantial free cash flow.
BP share price forecast
The daily chart shows that the BP stock has been in a tight range recently. Along the way, the shares have formed an ascending channel that is shown in red. The current price is slightly above the lower side of this channel. It is also trading at the same point as the 25-day and 15-day moving averages while the MACD indicator is slightly below the neutral level.
Therefore, for now, the BP share price will likely remain inside this channel. In the longer term, however, the stock will likely bounce back as investors eye the upper side of the channel at 335p.