Despite oil prices recently plunging back into bear market territory, T. Rowe Price European Equity Fund manager Dean Tenerelli believes selected names, such as Royal Dutch Royal Dutch Shell , can still unlock value for investors.
Royal Dutch Royal Dutch Shell shares (AMS) have climbed 37% since the low in early January. It is up 2.5% this afternoon in Amsterdam trading. Below is Dean’s view on the sector:
“Our preferred energy names – such as Royal Dutch Royal Dutch Shell – are at the low end of the cost curve and offer economically secure growth. We still believe the low price of oil and inflationary capital expenditures are squeezing margins across the upstream value chain, which is weighing on the sector.
“We recently initiated a position in Total, the French integrated oil and gas company. The company has cut costs significantly and has a clean balance sheet, resetting the business for weaker oil prices. It should be able to grow in the mid-single digits to 2019, helped by a suite of projects that that should drive upstream volume growth.”