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Is BP Stock a Solid Long Term Investment?

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When you think of powerful oil and gas companies, BP is probably one that comes to mind almost immediately. As a matter of fact, a lot of people have started to wonder whether or not it would be a good idea to invest in BP stock as a long-term investment as opposed to something else. This often brings about a lot of questions, as investing in any type of oil and gas industry can be either extremely beneficial or extremely risky, depending on the situation that's occurring in the world at any given point in time. If you're curious about whether or not you should invest in BP stock as a long-term investment, you have to do some investigating first.

About the Company

Obviously, the first thing you want to do is learn more about the company itself. You might be surprised to know that this company has been around since long before you would probably even think it necessary for an oil and gas company to exist. It was founded all the way back in 1909. Ever since that time, the company has been headquartered in London. They've even had the same CEO for the last two years, something that you don't see all that often with oil and gas companies. There's no doubt about it, the company has had more than its fair share of issues in the past, especially with regard to the much-publicized BP oil spill that happened several years ago. Nevertheless, they're not the first company that's ever suffered these types of issues. In fact, oil spills are unfortunately rather commonplace. As a result, that doesn't have a great deal of bearing on whether or not you should invest in this company as a long-term stock option. What you might be interested in knowing is that currently, you can purchase a single share of the stock for $29.84. You’d probably also like to know that the stock is currently up by 1.50%, which means that the stock is worth $0.44 more today than it was on the last day of trading. That may not sound like much, but every little bit counts when you're talking about the stock market.

It’s Not All About Oil and Gas

One of the things that typically defines oil and gas companies is that they focus almost entirely on this particular industry. That's all well and good when the industry is going strong, but it doesn't do a lot of good when things start to decline. This is where BP stands out from the crowd. They actually have a number of different programs that they're currently working on, all of them designed to make sure that the company itself remains on a solid foundation, even when the need for traditional oil and gas isn't as strong as it currently is. For example, they've already stated that they're well aware that the demand for oil and gas is going to decrease sooner rather than later. As a result, they've been working on alternative energy for a number of years now. Recently, they stated that they were ready to ramp up production in those areas significantly over the course of the next decade. This virtually ensures that the company will remain at the forefront of the industry, even when the very face of that industry changes in a major way.

One of the new methods of energy that they're currently dealing with involves hydrocarbons. They already have a well-established portfolio here and that will only continue to increase as time goes forward. That puts the company in a good position, as they're not completely dependent on the strength of traditional oil and gas in order to remain financially secure. Another reason that a lot of people are confident about the idea of investing in them as a long-term stock option is because they experienced an approximate 8% yield last year, with that yield expected to increase to approximately 12% by the end of this year. Granted, the predicted yield is something that is dependent on oil staying at approximately $90 a barrel, but the company is more than capable of standing on its own two feet, even if that price is slashed in half. In short, they have chosen to take the necessary steps to keep themselves financially protected regardless of what happens with the industry itself. In a world where there is no doubt that the oil and gas industry is going to change dramatically, this is a definite plus because the overwhelming majority of other companies are still focusing almost exclusively on traditional fossil fuels.

A More In-Depth View

If you're like most investors, you're interested in getting a more in-depth view of how this company plans to keep itself relevant as the industry changes. It might sound like you're beating a dead horse, but it's imperative to know these things if you plan on investing in them as a long-term option. As a potential investor, what do you take away from all of this? Within the next eight years, BP plans on having roughly 40% of their revenue based in renewable energy sources that do not have anything to do with traditional fossil fuels. That gives you a couple of different things to think about as someone who may be interested in investing in this particular stock as a long-term option. First and foremost, you know that the company is already doing well and that their stock is currently selling for more than $20 a share.

By the same token, you know that even when the price of oil and gas drops, as it inevitably will, the company's stock should not take a significant hit. Furthermore, it's important to note that as the company moves forward, it has a solid plan for remaining financially strong and that means that its stock is likely to remain strong as well. In other words, you have a better chance of investing in this company as a long-term option and actually making money off the deal than you might from other oil and gas companies who don't have the forward-thinking ability that BP has so clearly demonstrated. Since you're considering investing in them as a long-term option with the express purpose of being able to make far more money than you invested within the next three to five years, it would only make sense to consider this company first and foremost because they've taken the time and effort to make sure that they don't just go by the wayside when people start using other forms of energy.

The Last 30 Days

If you're still not convinced that this could potentially be a good option for you, consider going back and looking at how the stock has performed over the course of the last 30 days. It's interesting to know that while there have certainly been ups and downs, as there is with any stock, this one has remained largely unchanged. As a matter of fact, it's currently selling for more than it was a month ago. In addition, you can go back and look at previous quarters and even its performance over the entirety of the last 365 days in order to see that even during times when the stock market has been especially volatile, this particular stock has remained quite stable.

When you consider the fact that you're talking about an oil and gas company, that's really saying something. These types of companies have a tendency to fluctuate a great deal where the value of their stock is concerned, largely because they're dependent on world events that can change at a moment's notice. Traditionally, the price of the stock goes up significantly when the price of oil and gas goes up and then dips just as significantly when that price goes back down. It's relatively uncommon to find an oil and gas company that doesn't fall victim to this type of thing. As a matter of fact, it can be difficult to find a company in this particular industry that has any real stability to its stock whatsoever. Once you do find such a company, it's important not to let go of them because you don't know when or if a similar opportunity is going to come back around.

It’s Not All Smooth Sailing

By now, you might have gotten the impression that everything is almost perfect with this company and that they’ve never experienced a downturn. Of course, that's not correct. As a matter of fact, it's not even realistic to think that a company could perform in such a manner. You have to set realistic expectations. Otherwise, you end up running the risk of being disappointed or worse yet, being out a significant amount of money. Just like every other stock, this one has had its fair share of downturns over the years. One thing that still impacts them a great deal is whether or not OPEC, the organization that basically controls the price of oil and gas around the world, decides to significantly drop the price with little or no advance notice.

Even though BP is working on alternative energy with a desire to make almost half of their revenue from it within the next eight years, they are still largely dependent on what happens with world events related to oil and gas prices in the here and now. At the moment, that means that their stock prices can fluctuate and sometimes, they do. If you're talking about a long-term investment that can potentially save you a lot of money in the long run, then you might be onto something. As a matter of fact, there is every chance that this is a stock that will perform better within the next three to five years than it currently performs. Considering the fact that it has traditionally performed quite well, that's definitely exciting news for anyone who is considering using it as a long-term investment option.

Is it a Good Option?

If you're still undecided about whether or not this is a good option to use as a long-term investment, consider this fact. It isn't very often that an opportunity such as this comes along. As a matter of fact, it can be exceptionally difficult to find good investment options that will still be solid years in advance. When you do run across a stock that seemingly has all of the makings of something that can provide you with a solid financial future by adding to your portfolio, it's important to take those chances and run with them. Even if you don't normally choose to invest in oil and gas companies, it may be a good idea to take a second or even a third look at this one.

It's important to remember that there is nothing you can do with the stock market that is absolutely guaranteed. There is a certain amount of risk involved with everything that you decide to invest in. There's always a chance that you will invest in a stock that doesn't perform as expected. There's also a chance that you'll decide to hold on to something just a little bit too long and end up losing some money on it. That being said, you enter into stock market investments with this knowledge while simultaneously doing as much research as possible and then investing in the stocks that you believe have the capability of performing according to your needs. If you feel that this particular one matches up with those needs, then it might be time to pull some money together and invest in a number of shares in the hopes that you'll be able to cash in on a big pay day later on.

Allen Lee

Written by Allen Lee

Allen Lee is a Toronto-based freelance writer who studied business in school but has since turned to other pursuits. He spends more time than is perhaps wise with his eyes fixed on a screen either reading history books, keeping up with international news, or playing the latest releases on the Steam platform, which serve as the subject matter for much of his writing output. Currently, Lee is practicing the smidgen of Chinese that he picked up while visiting the Chinese mainland in hopes of someday being able to read certain historical texts in their original language.

Read more posts by Allen Lee

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