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Why I’d Buy British American Tobacco plc Before Royal Dutch Shell Plc

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By Peter Stephens – Tuesday, 16 June, 2015


For investors in Shell the last year has been particularly tough. The declining oil price has hit its profitability and investor sentiment very hard, with Shell’s share price falling by 24% during the period, while the outlook for ‘black gold’ remains highly uncertain.

While Shell’s financial performance is significantly dependent upon the price of oil, which it cannot control, British American Tobacco’s bottom line is exceptionally stable.

Shell, on the other hand, has financial performance that is extremely volatile. That’s despite it being one of the most stable oil companies in the world and, looking ahead, it appears as though its bottom line will remain very uncertain during the next two years.

While Shell’s longer-term growth prospects are largely dependent upon an external factor (i.e. the price of oil) in which it has no say, British American Tobacco has far more control over its future.


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