BP's share price has been slaughtered in the wake of the Gulf of Mexico oil spill, notes Ian O'Sullivan at spread bettingbroker spreadco.com. It has tumbled by more than 20% to just above 500p, wiping £25bn off its market capitalisation. That's more than the likely cost of the clean-up operation.
BP shares trade at roughly seven times forward earnings for the current financial year, compared with, say, Royal Dutch Shell on a multiple of 8.7. Then there is the forward yield of 7.5%, higher than Shell and second only to AstraZeneca among members of the FTSE 100.
Of course, the tumbling oil price hasn't helped, with crude falling some 22% from its recent highs of less than a month ago. However, says O'Sullivan, in a similar slide to the 500p level in March 2008, BP rebounded back to 650p within two months, a 30% gain. There have been similar bounces at the 500p level on several occasions -in 2000, 2001, 2005 and 2007; it's something of a "line in the sand" for buyers. So if you're feeling brave, O'Sullivan suggests you might want to buy BP shares on a spread bet, setting a stop loss of around 475p in case the general market backdrop keeps deteriorating.
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Similarly, in the US, Exxon Mobil shares have fallen 26% this year to lows not seen since the depths of the 2008 financial crisis at $60.30. $60 has been an important support/resistance level going back to 2005, so again, now could be a good time to either buy into Exxon Mobil shares for the longer term, or you could spread bet on the stock to play any short-term bounce.
