This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Will BP stock recover from Russia exposure?

Chris Lau, Kapitall: BP stock tracked lower with companies with exposure to Russia. Will it recover?

When BP plc ( BP) reached $50 in late February 2014, shares promptly sold off. Unrest brewing between the Ukraine and Russia is fueling uncertainty. BP’s major holding in Rosneft, which is majority owned by the Government of Russia, could face disruption. In the USA, setbacks in the legal proceedings against BP in relation the Gulf of Mexico spill are not helping either. These external factors should make investors consider whether the drop in BP is temporary or not.

BP committed to Russia

BP’s CEO Bob Dudly affirmed his commitment to the company’s Russian investment. Rosneft is an important asset that generates strong cash flow for BP. BP is selling down assets, boosting profitability and revenue, all to pay for claims related to the spill.

BP has a goal of growing operating cash flow by 2018. By committing to winning assets like Rosneft, it is very likely that BP will improve shareholder value in the next few years.

Related investments

Exxon Mobile ( XOM) could interest investors uninterested in controversial companies like BP. Its market capitalization is the largest in the energy segment. Chevron ( CVX) is also bigger than BP. Exxon and Chevron are valued at a forward P/E of 13 and 10, respectively. BP’s forward P/E is 10, which is also comparable to that of Total SA ( TOT).

Chevron could face volatility as the Ukraine/Russia story unfolds. It has an exploration and oil and gas development project in western Ukraine.

Expect more volatility

In the short term, events in Ukraine will raise the volatility in BP shares. There could be downside ahead, but the outcome of Ukraine’s instability is unpredictable. The only thing an investor who is bullish in BP may do is to look at the decline as a buying opportunity.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs