Did you actually think that the price of oil was going to drop? Speculations were calling for $20-30 oil. Surprise, surprise, oil has been priced at around $80 per barrel, a price that is 100% higher than any other in the past 12 months. The economic U.S. and global economy recovery has begun and this is why you should look into purchasing BP plc (NYSE: BP). If you had been smart to purchase BP back in March for $41.72, then you’re looking at a gain of 30%.
It was a hard year for BP, but it’s beginning to improve its essentials over the next 2-4 years. Plans include continued oil and natural gas reserve replacements and a restructure of downstream operations. In FY2009, revenue is topping at $220-230 billion, but is estimated to be around $300 billion in FY2010; assuming that there is only a $55-65 per barrel oil price. The price of crude oil is likely to skyrocket to a higher price in 2010, unless the economy stalls once again.
Estimates for BP from First Cal FY2009/FY2010 are $3.84 to $5.78. The 2010 price is likely to be low. BP’s shares are still on sale with a P/E of around 12.
BP is a moderate-risk stock, and if you’ve already purchased the company’s shares, it’s probably best to hold on to them. If not, think about purchasing at least a 50% position in BP now, adding 25% in about a month. Don’t buy more than 75% before December 2009. The Sell/Stop Loss for buying shares in BP is at $27.