The Motley Fool

Royal Dutch Shell shares: is this a great time to buy?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Silhouette of an oil rig
Image source: Getty Images.

Oil stocks were some of the worst performers of 2020 and many oil companies are struggling to survive. The Royal Dutch Shell (LSE: RDSB) share price itself is still 50% off its peak. However, the past few weeks have been slightly more favourable to oil stocks. Indeed, the price of Brent crude oil has now hit $56 per barrel.

I also believe that Shell’s recent decision to acquire the electric vehicle (EV) charging company Ubitricity is a sign of progress. As such, with demand potentially continuing to increase throughout 2021, is it the right time for me to buy Shell shares?

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

The deal to buy Ubitricity

Although it was only announced yesterday, and the sum has not yet been disclosed, I believe that the deal to buy Ubitricity is a shrewd piece of business. This is despite the fact that Shell shares fell 3% on the day.

Ubitricity operates the largest public EV charging network in the UK, and has also seen growth in France and Germany. I think the move to buy the company comes at a good time. Boris Johnson recently announced that the sale of new petrol and diesel vehicles would be banned from 2030. A number of car companies, such as Volkswagen and Renault, have also increased electric car production this past year.

This acquisition demonstrates Shell’s expansion into this fast-growing market. It also represents the company’s commitment to a net-zero emissions business. With climate change such a prominent issue within society right now, I believe this is essential for Shell’s longevity. This recent deal underlines a commitment to this future, and I think it will lead to gains in the Shell share price in the long term.

Further factors to consider

The firm’s third-quarter trading update was actually fairly positive, considering the challenging environment. Indeed, profits of $489m represented a significant improvement in comparison to the $18.1bn loss in the second quarter. Gearing had also fallen by over 1% over the period, due to net debt falling. With the fourth-quarter update due at the start of February, signs of further improvements may therefore be met by gains in the Shell share price.

Nevertheless, there are also negative factors to consider. For example, although the price of crude oil has been rising, lockdowns around the world may lead to falling demand, and tougher weeks to come. Joe Biden’s presidency may also lead to greater taxes, regulations, and restrictions on oil stocks.

Would I buy (more) Royal Dutch Shell shares?

Since news of the Covid-19 vaccine, the Shell share price has seen very large gains. This has reflected increased optimism within the oil market. But it’s still a long way away from its pre-Covid price. I already own Shell in my portfolio, and I’m tempted to add more. Although the long-term future of many oil stocks is in doubt, I believe Shell has shown sufficient commitment to renewable energy. This has included the sale of many of its assets, in order to invest further into renewable energy sources. The opportunity for further dividend growth in the next trading update may also boost investor sentiment. 

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story.

In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

Stuart Blair owns shares of Royal Dutch Shell. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.