3. Shell Plc (NYSE:SHEL)
Forward P/E, as of September 22: 8.4
Analyst Upside Potential, as of September 22: 23%
Number of Hedge Fund Holders: 49
Shell Plc (NYSE:SHEL) is one of the most undervalued blue chip stocks to buy according to analysts. The global energy company is engaged in the exploration, production, refining, and trading of LNG, crude oil products, and other related products.
In the second quarter of 2024, Shell Plc (NYSE:SHEL) signed new agreements, further enhancing its position in LNG. The company agreed to acquire Pavilion Energy in Singapore and in early July the company initiated two separate investment decisions in LNG projects in Trinidad and Tobago and Abu Dhabi.
The company is also strengthening its position in renewable energy. At the start of 2024, Shell Plc (NYSE:SHEL) had around 2.5 gigawatts (GW) of renewable energy in operations, 4.1 GW under construction, and nearly 40.2 GW of potential capacity.
In the second quarter of 2024, not only did the company initiate a further $3.5 billion buyback program for the next three months, but the company also logged $74.5 billion in revenue. It is evident that despite geopolitical tensions, the company remains resilient and therefore deserves a position on our list.
Analysts are bullish on SHEL and their 12-month median price target of $84.5 points to a 23% upside from current levels. Overall, 49 investors were bullish on the stock at the end of Q2 2024, with total stakes amounting to $6.06 billion. As of June 30, Fisher Asset Management was the largest shareholder with a position worth $1.73 billion.
Third Point Management made the following comment about Shell plc (NYSE:SHEL) in its second quarter 2023 investor letter:
“We initiated a position in Shell plc (NYSE:SHEL) in the summer of 2021 and highlighted the company’s significant discount to intrinsic value as well as to US-listed peers after decades of poor performance. While shares have performed well since we initiated the investment, the company still trades at staggering discount to intrinsic value and represents a compelling investment at current levels. We initially argued (and still believe) that the fastest path to improved performance and better valuation would be a separation of Shell’s business units to better attract shareholders and improve accountability, the latter of which was essential when the company was in the hands of executives who had demonstrated virtually no focus on shareholder value creation.
The most important change at Shell over the past two years has been the upgrade in the management team, with the appointments of Wael Sawan as CEO and Sinead Gorman as CFO. They have demonstrated an unwavering commitment to shareholder value, capital discipline, and improved returns. At their recent analyst day, Mr. Sawan stated “underpinning all that we do will be a ruthless focus on performance, discipline, and simplification.” It was the third time they used the term “ruthless” in their presentation, sending a strong message to shareholders…”(Click here to read the full text)
