Royal Dutch Shell plc (ADR) (RDS.A), BP plc (ADR) (BP): Top Integrated Oil Companies Based on Valuation

Integrated oil companies have underperformed the market over the past five years and in a way, that is what Kevin Holt of Invesco Comstock Fund likes about them. In an interview on CNBC, the analyst reiterated his long position on Royal Dutch Shell plc (ADR) (NYSE:RDS.A) and BP plc (ADR) (NYSE:BP) as some of the stocks with a huge upside, going forward. Kevin Holt mentioned that relative to market the stocks of these companies are trading cheaper in terms of price to book value ratio.

Royal Dutch Shell plc (ADR) (NYSE:RDS-A)

Royal Dutch Shell plc (ADR) (NYSE:RDS.A) is one of the stocks that Holt is keeping a closer watch on, despite selling some of its assets as one of the cost cutting measures of getting rid of non-core assets. Royal Dutch Shell plc (ADR) (NYSE:RDS.A) according to the analyst has excess capacity in terms of European refining. The company currently boasts of a 4% return on capital with a huge growth potential on the upside.

“[...] I am not a growth investor, but Royal Dutch Shell plc (ADR) (NYSE:RDS.A) has a 4% return on invested capital, if you are a finance guy you are like, that is not an acceptable return. The stock just counts too. So if they could just run rate this profitability level, we get 40% upsideIf they can get the industry average, we can get about 70% upside,” said Mr. Holt.

BP plc (ADR) (NYSE:BP) despite facing scandals in the past and having been forced to rationalize its assets is also under the keen watch of MR. Holt. The stock is inexpensive at 1.2x book-value essentially discount value, just like Royal Dutch Shell plc (ADR) (NYSE:RDS.A). Political instability continues to be a major concern as it always causes  oil prices to spike, positively affecting the stock in the short-term but with huge repercussion in the long-run.

“We have 3.2 million   barrels a day that come out of Iraq, most of it is in the south. If you do get disruptions, prices are going to spike, which will be great short-term for the stocks, but horrible for the stocks long-term and horrible for the world economy because it is going to drive us into recession,” said Mr. Holt.

Disclosure: none

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

The 10 Longest Wars of All Time

The 13 Worst Looking Foods that Taste Great

The 6 Most Gruesome Injuries Suffered During a Sports Match

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!