International Business Machines Corp. (IBM), Royal Dutch Shell plc (ADR) (RDS.A), BP plc (ADR) (BP): Near Fifty Two-Week Lows, Who’s a Buy?

Another big oil company trading near 52-week lows

Shares of BP plc (ADR) (NYSE:BP)  are 4.39% above 52-week lows. While I do believe that BP is a quality company with a solid history of profitability, I don’t think investors should invest in BP when Royal Dutch Shell plc (ADR) (NYSE:RDS.A)appears to be a better buy. I believe the following chart proves my point.

*calculated using 2010-2012 avg normalized, diluted EPS
**Normalized net income

As you can see, Shell beats BP plc (ADR) (NYSE:BP) in nearly every category on that list. Shell has grown sales and profits more quickly than BP. Shell has less debt than BP. Shell pays more in dividends than BP. The only category on that list where BP beats Shell is the dividend payout ratio, an area where BP is only marginally better. It would be tough to argue that BP plc (ADR) (NYSE:BP) is a better buy than Shell right now.

Foolish final thoughts

When the stock of a quality company hits 52-week low territory, as is the case with these three companies, an investigation is in order. IBM is creating technologies that harness the awesome power of artificial intelligence to create what it calls a smarter planet. And a smarter planet is a better planet. I’d be willing to wager no company will improve the quality of human life more than IBM over the next 50 years. Companies that drastically improve our quality of life, and their shareholders, will be well rewarded.

Demand for crude oil and natural gas will still be there in 50 years. As such “Big Oil” companies make perfect sense as a long term investment, provided the price is right. Two companies in that category are trading near 52-week lows, BP plc (ADR) (NYSE:BP) and Shell. Shell has grown revenues and profits faster than BP, pays more in dividends, and has less debt. Shell shares have been hit hard; buying in now should serve you well in the long run.

The article 3 Quality Companies Near 52-Week Lows originally appeared on Fool.com and is written by Ryan Palmer.

Fool blogger Ryan Palmer has no position in any of the stocks mentioned in this article. The Motley Fool owns shares of IBM. 

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