Investors bet on rebound in BP and other oil shares

[Amerigo Vespucci]

Source: Reuters

Some investors see this as a rare buying opportunity. Others said the stocks could underperform for years despite reduced valuations. They warned the uncertain outcome of the oil spill and risk to profits means investors should expect a bumpy ride in coming months.

BP has seen its shares fall 36 percent since April when the spill began. The company, now facing an Obama administration criminal investigation, has lost one-third of its market value or about $67 billion (46 billion pounds) since the April 20 explosion that killed 11.

"We are seeing some hedge funds have started building stakes. Political risk is driving the stock price down and makes it highly speculative. It could be value or could be a major break-up," a Zurich-based trader said.

The company carries a one-year forward price-to-earnings (P/E) of 5.74, the lowest among the oil majors.

Read more: http://www.reuters.com/article/idUSTRE6512T820100602?type=ousivMolt