SHEL

Shell stocks are trading 8% off their 2022 peak prices. The company has recently reported strong financial results in Q3 2022 and announced that its dividend could go up by 15% in the near future. The company’s management spent over $6 billion for buy back operations during the third quarter and is going to spend another $4 billion on this by the end of 2022. If the company continues to buy back its own shares with this pace over the next two quarters, Shell free float could decrease by 10%. Its shares are now trading at $56 per share, but management’s efforts may push the price to $65, above pre pandemic levels.

The company continues to invest in oil and gas exploration and production. Shell invested $18 billion in traditional energies, well ahead of the $2.4 billion investment in green energy. This is a positive sign considering the current market situation. A faster move towards green energy on a global scale is seen unjustified. More governments are now betting on traditional carbon energy resources and are ready to support such efforts.

Shell is thought to accumulate $33 billion in free cash flow, sending $7 billion to dividend. The other $26 billion will be distributed to buy back operations and debt redemptions. So, the company is seen to be very strong at the moment.

Wells Fargo published research saying the investments in the oil and gas sector is one of the best decisions to be made during high inflation periods. Oil prices have soared by 40% since 2000, well above the return from many S&P 500 listed companies. The demand for oil is not falling dramatically despite high prices. Many developing countries may increase the demand in the longer term considering demographic and economic factors such as rising GDP. More oil is expected to be used for electricity generation.