7. BP p.l.c. (NYSE:BP)
Number of Hedge Fund Holders: 40
BP p.l.c. (NYSE:BP) is a global energy company, founded in 1908, with its headquarters in London, U.K. It’s a company engaged in the production of natural gas, while also focusing on wind power, hydrogen, and carbon capture. Along with this, the company also produces oil and is engaged in EV charging, retail fuel, and lubricants, which its subsidiary Castrol takes responsibility for.
BP p.l.c. (NYSE:BP) is engaged in several hydrogen initiatives across the globe. Major developments took place related to the company’s proposed blue hydrogen facility in Teesside, H2Teesside. In February 2024, the company announced that it would be teaming with BASF, an international chemical company, whose gas-treating technology BP would be using for capturing carbon dioxide that would be produced during the process of hydrogen production. This is a crucial development given that the project has its commercial operations planned in 2028. Moreover, this project is high in stakes as it would expectedly produce 1.2GW of hydrogen by 2030, fulfilling 10% of the UK’s hydrogen target of 10GW by the same time.
Additionally, it was reported on 16th July 2024 that the company has gotten the green signal from the Federal Ministry for Economic Affairs and Climate Action (BMWK) and the Lower-Saxony Government in relation to funding required by the company for its 100-megawatt (MW) green hydrogen project in Germany. The hydrogen that would be produced has the potential to bag industrial clients for the company in the future, especially steel and chemical companies.
The share price of the company has taken a dip in the past year, in line with the falling oil and gas prices. While natural gas prices have fallen 2.7% in the past year, WTI Crude oil has fallen 1.7%, and understandably, the commodities’ prices have their say in the share price of the stock.
Lower oil and gas realizations, outage in the Whiting refinery, and lower fuel margins led the company’s replacement cost (RC) profits to decrease by $0.3 billion in the first quarter of 2024 to $2.7 billion. Nevertheless, the overall profit of the company rose sharply from $0.4 billion in Q4 2023 to $2.3 billion, thanks to inventory holding gains and increased production of oil despite lower realizations. Despite that the company’s cash flow just hung over the $5 billion mark, which is the lowest level of cash flow since Q4 2020, the company showed its commitment to shareholders’ returns by deciding on a $1.75 billion share buyback plan and announcing a dividend of 7.27 cents per ordinary share.
Despite the cyclical nature of the industry the company is in, and despite the up and down of the stock in the past year, the analysts believe in the developments the company is making in the field of alternative energy solutions industry, especially the hydrogen market, which is the apparent future of energy sector. The analysts have set the target price of the stock at $42.36, which is an upside of 21% from its current price of $34.92. Moreover, 40 hedge fund investors hold interest in the stock, worth $2 billion, helping the stock take a spot in our list of 10 Best Hydrogen and Fuel Cell Stocks to Buy.
