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Zacks Investment Ideas feature highlights: BP

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For Immediate Release

Chicago, IL – July 11, 2018 – Today, Zacks Investment Ideas feature highlights Features: B.P. Plc (BP - Free Report) .

Oil’s Back in a Big Way, and This Stock Looks Like a Heavy Hitter

Oil prices hit a nearly 4-year high on Tuesday on global supply concerns with WTI trading over $74/barrel and Brent Crude threatening to cross the psychologically important $80 mark. Geopolitically, it’s looking like a perfect storm for oil production with output already considerably reduced in Venezuela, looming sanctions on Iran, an oil worker strike in Norway, port closures in Libya, etcetera, etcetera.

The U.S. is aiming to consume zero oil from Iran before the end of 2018, and to replace the shortfall, President Trump is imploring our allies in the middle east to pump more oil to alleviate the supply crunch and keep prices in check.

Analysts are expecting however that OPEC- and specifically Saudi Arabia - will not be able to fill the entire gap in an increasingly energy-hungry world and that prices will continue to grind higher. In fact, if OPEC does pump enough to fill in for the missing oil from Iran, they will be left with virtually zero excess capacity in the event they need to respond to unexpected demand issues in the future.

While significant advances have been made in the extraction of oil that was previously very difficult to access – specifically North American shale deposits – the U.S. remains reliant on significant amount of global oil production and will be for the foreseeable future.

After a brutal few years in the industry, the big global oil producers have significantly cut their expenses and are now operating leanly and enjoying the spoils of higher prices. Investors are enjoying aggressive dividend and buyback practices as the oil companies seek to reward them by returning cash flow.

B.P. Plc is one of the true global giants in exploration for and production of petroleum products. Operating on six continents, BP is involved in every aspect of the business, including drilling, refining, marketing, transportation, and the manufacture of petrochemicals. With an eye on the future, they are also heavily invested in natural gas and solar power generation technologies and figure to be a leader in the long term global transition to lower carbon energy sources.

In terms of the metrics we value at Zacks, BP has a nearly perfect report card. Not only is it a Zacks Rank #1 (Strong Buy), but with a forward P/E ratio of 14X, it earns a value style score of “B”, plus growth and momentum scores of “A” and an overall VGM of “A.” Our current Consensus Earnings Estimate for 2018 is $3.34/share, up from $2.79/share just 90 days ago and a whopping 78% improvement over 2017.

Finally, BP pays a solid 5% dividend and has plenty of free cash flow to back it up. Dividend yield is all too often overlooked as an important component of investment return, but all it takes is one look at the above chart of total return (rather than the more familiar price-only chart) to understand how much more profitable it can be to own a high yielding company, especially as the returns compound over a multiple-year holding period.

With a tailwind from oil prices and an eye on the energy technologies of the future, BP is positioned to continue rewarding investors for years to come.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

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