Royal Dutch Shell’s valuations make its stock look very tempting despite concerns over electric cars taking over.
Why do we find Shell attractive?
- Acquisition of BG makes Shell the global leader in LNG
- Shell raised their Free Cash Flow (FCF) targets by 20%
- Gearing expected to hit 20% target in 2018
- FCF target for 2021 at $65 oil delivers a 10% FCF yield
- 6% dividend yield for 2018
Until the new batteries actually deliver as promised, gas and diesel will remain a part of the automotive mix that makes a strong case for Shell.
Peter Wilmshurst is the portfolio manager of ASX listed Templeton Global Growth Fund (ASX: TGG) and an executive vice president in the Templeton Global Equity Group with research responsibility for banks in Europe, and Asian telecommunications...