Gamble on BP Shares, where is the Bottom?
BP Plc (NYSE:BP) has appeared to bottom after just hitting a 52-week low of $26.75 a share and with the news today that the oil spill could finally be stopped by late July is giving traders and investors some hope to go long BP.
Over the past 12 months BP (BP) shares have traded between $26.75 and its 52-week high of $62.38. BP shares are now trading with a P/E Ratio of 5.2 and EPS of 6.36. After hitting that 52-week low of $26.75 BP shares have moved up 18.99% and if you have faith in the company's management today's news that the leak could be plugged by July 20th to July 27th (only 140+ million gallons later) is reason enough for some traders to move into the stock.
Yesterday BP CEO Tony Hayward met with the Crown Prince of Abu Dhabi and other officials in the oil rich city state, whom Hayward described as, “long-term partners and friends.” His jet left Abu Dhabi on Wednesday evening, bound for Angola, BP’s second deep water oil heartland after the Gulf of Mexico.
The main purpose of Hayward’s trip is obvious. Those countries account for more than half of BP’s oil production. Feverish speculation in the past month over BP declaring bankruptcy, being taken over by a rival or meeting some other grisly end has left local partners in need of reassurance.
Whether there is a secondary purpose to Hayward’s trip is unclear. Speculation has swirled all week that Hayward wants a deep pocketed sovereign wealth fund to improve BP’s liquidity and fend off acquisitive rivals by taking a big equity stake in his company.
It does appear when viewing the chart that the bleeding has stopped for BP shares, too bad the same can't be said about the oil spill. If you are looking to go long BP, expect volatility, that's the bottom line. BP has said they won't issue more shares of its common stock, but if they do, its going under $25 in a heartbeat.