Don’t Miss This Top Choice for Many Economic Scenarios: Chevron Corporation (CVX) and More

BP plc (ADR) (NYSE:BP)…We all know about the Gulf oil spill disaster. Its legacy lives in this stock price.  Its pretty tough to find a large cap blue chip at 7 times earnings with a 5%+ dividend..so there’s a lot of bad news built in to BP’s stock price. BP has been selling what it deems to be non-core assets ever since the oil spill. BP hopes to create a smaller company with stronger growth, and importantly believes it has already reserved for the worst case liability scenarios stemming from the oil spill. BP sees a strong future with higher exploration activity and a continued readjustment of refining activities. But BP is challenged by declining revenues as it shrinks overall operations.

Royal Dutch Shell plc (ADR) (NYSE:RDS.A)…Royal Dutch is another example of the deep value you’ll find in Europe. One of the largest integrated oil and gas companies in the world, for sale at less than 8 times earnings with a comfortably payable 5% dividend.  Royal Dutch plans to ramp up upstream exploration and production…growing annual worldwide production by 25% in the next 5 years.   The company is also the world’s 2nd largest natural gas producer. With business in 140 countries, Royal Dutch shell always faces political risks and investors worry about future returns on its high level of capital spending. But you’re getting a safe blue chip stock while enjoying a near junk bond yield while waiting for appreciation.

Investing is all about risk vs. reward. Whether you see a synchronized global recovery or forecast global political chaos…whether you want a growth story or a value/income story….there’s a strong case to be made for oil stocks.

And there’s a psychic benefit: Each time you drive up to the local service station and see sky high prices that make you want to curse–you can take some joy in realizing at least some of the profits from  those prices.

It may be time to drill down on the iShares S&P Global Energy ETF.

The article Don’t Miss This Top Choice for Many Economic Scenarios originally appeared on Fool.com and is written by John Mooney.

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