Today I am outlining why Royal Dutch Shell (LSE: RDSB) could be considered an attractive addition to any stocks portfolio.
Oscillating earnings seemingly at an end
Since the financial crisis of five years ago battered the bottom line, Shell has worked hard to create a leaner and much more efficient 
earnings-generating machine. The group has transformed itself through aggressive cost-cutting, a sharp reduction in capital expenditure and a multitude of asset sales, a programme that City analysts expect to pay off from this year onwards.
The oil leviathan is anticipated to snap from last year’s 39% earnings decline with a 42% increase this year. And a further, if more modest, 2% improvement is chalked in for 2015.
At current prices these growth projections make Shell a bona fide bargain, with P/E multiples of 11.1 and 10.9 for 2014 and 2015 respectively just above the value standard of 10. And the company’s position as a premier-priced stock is underlined by a miserly price to earnings to growth (PEG) multiple for 2014 of just 0.3, comfortably within the cheap seats below a value of 1.
Political tensions could dent oil supply
Fears over plentiful oil supplies have weighed heavily on the black gold price in recent months, and Brent crude slipped to its cheapest since last summer below $102 per barrel earlier this week. Indeed, signs of financial cooling in China and Europe, combined with expectations of rocketing US shale production and increased capacity elsewhere, have kept prices hemmed in for months now.
But with geopolitical tensions in Eastern Europe and the Middle East escalating by the day, a backcloth of increasing supply worries could give the oil price — and with it Shell’s revenues profile — a further boot in the right direction.
The possibility of tightening trade sanctions on Russia from Europe and the US is a very real prospect, particularly as reports of Moscow-endorsed troops entering Ukraine have forced NATO into action. Meanwhile, ISIS Islamist rebels continue their rampage across huge swathes of Syria and Iraq, and although oil continues to flow from large parts of the region, the spectre of another full-blown Western campaign in the area could threaten supply levels and spark a fresh price run.
