There are plenty of contrarian plays on the FTSE 100 at the moment, mostly in the embattled commodity and oil sectors, but also banking. 

Shell Cracks

Anglo-Dutch oil producer Royal Dutch Shell (LSE: RDSB) and Asia-focused bank Standard Chartered (LSE: STAN) are two that grab my attention. Shell’s share price is down 38% over the past year, while Standard Chartered has fared even worse falling 48%. Shell is of course yet another victim of the oil price crash, while Standard Chartered is exposed both to the Chinese hard landing and commodity sell-off, having loaned an estimated $1.9bn to trading firms in the troubled natural resources sector.

Both have seen their valuations hammered as a result. You can pick up Shell at just 6.61 times earnings, while Standard Chartered is even cheaper at 4.9 times. RDSB’s valuation reflects negative sentiment in the oil sector, STAN reflects both emerging market fears but also more fundamental problems at the company. Management is having a strategic overhaul, shifting away from industrial and investment banking to focus on affluent individuals instead, but the switchover will take time.

Standard Slips

As both companies have struggled, their dividends have come under pressure. Shell has so far maintained its proud record of never having cut dividends since the war, but unless the oil price bounces something will have to give, with the stock now yielding a crazy 9.40%. If more investors believed this was sustainable, the share price would inevitably be higher, but clearly there is a lot of scepticism out there, even with cover of 1.6.

The oil bounce will come but investors may have to be patient, given the ongoing supply glut even before Iranian oil hits the market. Until then, the dividend will remain in growing peril. There is no such tension at Standard Chartered, which has already bowed to the inevitable and scrapped its payout.

Right Royal Risk

Both companies have suffered a collapse in earnings per share, with Shell’s EPS growth down 44% in 2015,  and Standard Chartered falling even more heavily at 61%. At least, the future does look brighter, with Shell’s growth forecast to be 7% this year, while Standard Chartered should weigh in with 28% EPS growth. While Shell’s revenues are expected to dip slightly this year pre-tax profits are forecast to jump from £6.85bn to £11.49bn, bolstered by extensive cost-cutting at the company rather than pricier oil.

Unchartered Waters

Standard Chartered is inevitably cutting costs as well (which company isn’t these days?) and pre-tax profits are also forecast to rise this year, from £1.48bn to £2.17bn. Both companies look attractive contrarian plays right now, although Shell is at the mercy of a variable it cannot control. Arguably, Standard Chartered is as well, as we wait to see what happens to emerging markets.

On balance, I would lean towards Shell. If only oil could post substantial gains, it could swiftly turn into a winner. Right now, however, that is a big “if”.

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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended Royal Dutch Shell B. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.