Profit Pregame

The Stock I’m Buying Instead of BP

This oil giant has had a change of plans…

BP is throwing its hat into the renewable energy ring.

What’s happening?

BP plc (BP) has spent many years leading the oil industry. But its recent announcement is shocking many. When reporting earnings earlier this week, the company revealed two things.

A substantial second-quarter loss, totaling 16.8 billion, slashing it dividends in half.

The plan to pull back on oil and gas production and instead pour billions of dollars into clean energy as part of a significant change of plans and outlook.

The company explained further, saying it plans a “10-fold increase in annual low carbon investments to $5 billion by 2030” as it “tries to deliver on its promise of net zero emissions by 2050” and prepares for a world that uses much less oil due to fighting climate change.

In fact, the company noted that it expects the demand by 75% over the next 30 years if the increase in global temperatures is limited to 1.5 degrees Celsius. It’s also predicting that by 2030, its production will fall at least one million barrels a day.

Where’s the money?

Despite the poor earnings performance, investors reacted positively to this green outlook. And BP shares rose by nearly 8%.

And while the chatter on the street is the big green initiative (and how investors can cash in on it), I’m personally not seeing eye to eye with those rushing to purchase some shares of BP currently. Because while I support the cause, I don’t think this new outlook will be a profitable one.

Here’s what I mean…

How can I get some?

Every time I see that a company has fired employees or cut dividends, and the stock goes up, I find it interesting. Because to me, it really doesn’t make any sense.

Back in the day, BP and XOM used to be two of the most innovative companies globally. IT seemed like every quarter, they delivered groundbreaking information, impressive results, and their growth seemed unstoppable. But it looks like they’ve lost their touch.

And while I have to comment BP for this greener outlook, an outlook that is needed no doubt – I don’t think investors should be running to throw their money into this stock. And that’s because I don’t see BP being the industry leader in the alternative energy sector. There’s plenty of already established companies in that industry who are miles ahead of BP – and that’s where I would be looking to put my money. For instance, I’ve got my eye on Ballard Power Systems (BLDP). This is a stock we’ve been seeing on S.C.A.N. a lot in The 1450 Club – so, I definitely see a profit opportunity for you.

With that said, if you own BP, I think now is the time you’ve been waiting for. I would cut ties with this beaten-down oil giant and take profits from this influx of investors and ride this short-lived strength straight to the bank.

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In the spotlight: Retail continues to be a sinking ship…

Yesterday, we talked about coronavirus’s impact on retail. But there’s another industry being hit hard by the lingering pandemic – the travel industry.

As the national lockdown brought travel seemingly to a halt – businesses adjusted plans to survive what many thought would be a few months. But now, as the pandemic continues, businesses are being faced with hard decisions and hard numbers. And one major travel company is having to do what many company’s current fear – massive layoffs.

Booking.com’s parent company plans to lay off up to 25% of its global workforce, which currently is about 17,000.

The parent company plans to finalize and make the announcements to employees on a country-by-country basis starting in September. Booking Holdings is also the parent company of other online travel companies like Kayak and Priceline, but at this time, the layoffs will only affect Booking.com.

And this layoff doesn’t come to much surprise seeing that Booking reported a 51% drop in first-quarter gross travel bookings year over year – and this quarter isn’t looking much better.

But like we talked about yesterday, there’s always a “diamond in the rough” no matter how downturned the sector might be. So, I’ll be keeping a close eye on what’s to come, and I’ll be sure to keep you posted.

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