Shell (SHEL) £20.80

Gain to date: 18.3%

Original entry point: Buy at £17.58

Our positive stance on Shell (SHEL) has been quickly rewarded as a combination of its corporate reshuffle, strong energy prices and bumper results helped lift the share price.

Having dropped the Royal Dutch from its name and fully domiciled in the UK with a primary listing in London, the ‘new’ Shell got off to a great start with its full year and fourth quarter numbers (3 Feb).

For the fourth quarter, adjusted earnings jumped 55% to $6.39 billion from $393 million a year earlier, while adjusted earnings for the full year increased to $19.3 billion from $4.85 billion in 2020. Both were ahead of forecasts.

Shell raised its first quarter dividend by 4% and said it would buy back $8.5 billion worth of shares in the first half of 2022, encompassing $5.5 billion of proceeds from the sale of its assets in the Permian basin.

The main danger for the business in the short term is a potential windfall tax with its bumper numbers coinciding uncomfortably with a massive increase in the UK energy price cap. An investor event dedicated to its liquefied natural gas business on 21 February could act as a near-term catalyst for the shares.

SHARES SAYS: A great start and we remain positive. [TS]

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