Stock pick of the week: BG Group - Buy
Published 28/06/2011 | 00:01
BG Group: BUY
BG Group is a global oil and gas company.
The company’s profits are broadly split two thirds exploration and production and one third liquefied natural gas (LNG).
The stock has dropped almost 20pc since May after missing earnings forecasts.
However, we believe that most of the reasons behind the miss were due to one-off headwinds (UK North Sea shutdown, Egypt and Tunisia unrest, Australian floods) which will largely be removed for the second half of the year.
In our view, the recent weakness provides an opportunity to buy into an outstanding growth story at an attractive price.
BG’s ambition is to grow volumes by 6pc to 8pc (7pc from existing discoveries) per annum to 2020, the best projected level in the sector.
In addition, the structural move towards gas from nuclear and transformational strategic success in Brazil and Australia make this a prime takeover candidate.
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