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Oil Giant Comparison: BP vs Suncor

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This month in our comparison series, we look at a legacy European oil and gas company, BP (NYSE:BP), and a Canadian heavy oil producer, Suncor Energy, (NYSE:SU). These two companies have a similar stock price and dividend yield, giving potential investors a bit of a conundrum as they look for places to grow wealth. In this article, we will try and clarify the likely arc the stock price of the two companies will take if oil prices reverse their present course, and head back toward $100 bbl as the year closes out.

The true tightness of supply is lost in the wall of worries occupying the market presently. I think the stage is set for them to resume front and center status as the SPR releases wind down this fall.

First, we will look at BP and close out with SU.

BP

BP's stock has traded in a fairly tight range of $28-$32 per share for about a year now, despite briefly nudging $34 in June. The company is flush with cash and recently raised its dividend and announced a share buyback. As an investor, I am more interested in the dividend than the share buyback. With nearly 20 billion shares outstanding, it’s going to be a while before share buybacks have much of an impact. Although, it can be argued that with the company’s absurdly low cash flow multiple, the company is making a shrewd investment. It can also be argued, from the stock’s weak connection to upward oil price movements, that it is dead money.

Marketwatch

I have looked at the company…





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