The Pros and Cons of BP Shares

In the world of stocks and shares one brand stands head and shoulders above the rest when it comes to resilience. BP has been through the mire over the years with scandal and bad press being no stranger to the brand, however they continue to be a strong force in the stock market. The question is whether or not BP shares should have a place in your portfolio; this article looks at both the pros and cons of BP shares at the moment.

Pros

Safety – The core reason why most investors buy BP shares is the safety of the brand. BP isn’t going anywhere; it has become too large an entity within a limited competition sector. The company has also worked tirelessly to further damage limitation procedures, by effectively implementing on field safety through the likes of a new 24/7 command centre, while improving on the capping, containment and drilling processes used.

Exploration – Seldom is BP a company that rests on its laurels, as exploration of new oil projects is at the core of their company M.O. In 2012 BP launched an unprecedented five major projects by announcing plans to further their presence in the Norwegian Sea, North Sea, Gulf of Mexico and Angola. This means that by the end of 2014 BP will have a total of 15 start ups in operation. They haven’t neglected older markets either, as they have extended leases for drilling in the US, Brazil, Canada, Uruguay and Namibia.

Cons

Public Opinion – Even though the financial implications of the Deep-water Horizon oil spill have been dealt with, with BP having put aside $40 billion to deal with the cleanup and future liabilities. The company still suffered a PR disaster in its aftermath, which did untold damage to BP’s public image. Potential buyers of BP shares will be wondering if financial issues connected to the event are 100% part behind them and whether or not they can ever restore the public’s faith in the company.

Oil Prices – The 1990s showed the world that a downturn in oil prices can be both significant and lengthy. The current downturn during the close of 2013, came amidst a powerful showing in the US dollar, but the continued slowdown in Europe and the docile geopolitical environment had a negative effect. Even if such turns out to be a temporary blip, investors must ask how long they think the effects of such will linger for before buying BP shares.

Final Thoughts

BP has never struggled to sell shares, having raised billions prior to the Gulf Oil Spill payout proving this. But, even ahead of such losses the company still pays close to attention and shareholders, with a positive looking dividend often the outcome of sticking by the company. While from the consumer side, they continue to find and invest in new energy sources, which should increase BP’s cash flow in the long term. Even though their ongoing troubles with public relations are noteworthy, BP shares can still prove to be a valuable and reliable asset should you be looking to add a big name brand to your portfolio.

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