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Royal Dutch Shell plc: Maybe I’m clutching at straws

Screen Shot 2013-01-11 at 20.09.51Yes, there is plenty to hate about Shell right now. It is currently under investigation for rigging petrol prices, and European Commission plans to prevent future commodity market abuse could force up prices. Maybe I’m clutching at straws, but that’s love for you.

Screen Shot 2013-09-16 at 00.01.41

Why I Love Royal Dutch Shell plc

Published in Investing on 25 November 2013

Extracts

There is something to love and hate in almost every stock. I still harbour warm thoughts towards Royal Dutch Shell, although sometimes I wonder why.

Shell has taught me the value of patience.

Patience is a virtue, they say. If that’s so, long-term investors in Shell must be very virtuous indeed. The stock is down 2% over the last two years, against a 28% rise in the FTSE 100. It is up just 3% in the past year, against 16% for the index. Shell is the straggler of my portfolio. Yet I simply refuse to believe this will continue.

It pumps up plenty of cash.

There was little to love about Shell’s recent Q3 results, with profits falling to $4.2 billion, down from $6.6 billion one year earlier. The share price instantly fell 4%. But there were compensations. Cash flow from operating activities hit $10.3 billion, up from $9.5 billion. Management was positive about the future, with a strong project flow for 2014 and beyond. It is also reducing its exposure to troubles in Nigeria. Maybe I’m clutching at straws, but that’s love for you.

My patience will ultimately be rewarded.

Businesses go in cycles. Shell is down, but it will get up again. Earnings per share fell 6% last year and are forecast to fall 17% in 2013. Next year, however, EPS is set to motor, with a rise of 11%. That is certainly worth hanging around for.

Shell is ready to shock the market.

Yes, there is plenty to hate about Shell right now. It is currently under investigation for rigging petrol prices, and European Commission plans to prevent future commodity market abuse could force up prices.

FULL ARTICLE

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