Investing in Repsol Shares - What to Watch in 2024
Investing in Repsol Shares - What to Watch in 2024
Carolina Caro Mora
12
Min read
Repsol is one of the world's largest oil companies, with a market capitalization of close to 16.5 billion euros as of 5 February 2024.
You can invest in Repsol in two ways: by buying Repsol shares in cash or by speculating on the price movement through Contracts for Difference or CFDs.
Although the Repsol Group was officially founded in 1987, its origins go back many years, specifically to 1927.
In that year, Campsa (Compañía Arrendataria del Monopolio de Petróleos S.A.) was founded to administer the state oil monopoly concession. Originally, it is a mixed company with minority state participation.
From then on, several milestones followed one after the other that led to the creation of Repsol as we know it today. Let's review some of them:
Milestones in Repsol's history
In 1948 the company REPESA (Refinería de Petróleos de Escombreras) was set up to set up a refinery in Cartagena. Repsol was REPESA's flagship lubricant brand.
In 1968, REPESA saw motor racing as the best test bench and laid the foundation stone for what is now known as the Repsol Racing Team.
In 1985, as part of the signing of the Treaty of Accession to the European Economic Commission, the Spanish government undertook to liberalise all economic sectors, including the hydrocarbons sector.
In 1987 Repsol S.A. was created as a result of the reorganisation of the Spanish oil sector. The company decided to adopt the name of REPESA's flagship brand because of its notoriety.
In 1989 the first step was taken towards the full privatisation of the group. Repsol shares are listed on the Spanish stock exchange and on Wall Street.
In 1999, the acquisition of the Argentinean oil company YPF consolidates Repsol as a global company, becoming the largest private energy company in Latin America.
In 2012, Argentina nationalised YPF and expropriated 51% of Repsol's shares in the company, dealing a severe blow to the Spanish oil company. After a court battle, Repsol obtained compensation from the Argentine government.
In 2015, Repsol acquired the Canadian oil company Talisman Energy.
In 2018, the company incorporates low-emission electricity and natural gas into its commercial offer as part of its commitment to energy transition and climate change.
Repsol is currently present in more than 40 countries, produces around 550,000 barrels of oil equivalent per day and has more than 4,600 service stations, a sector in which it is the leader in Spain.
In recent years, Repsol has opened several business lines to reduce its dependence on oil. For example, it has launched Solmatch for the design of solar communities in urban centres. Also with the installation of electric vehicle charging points.
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Repsol currently has a market capitalization of 16.5 billion euros as of 5th February 2024, according to the official website of Bolsas y Mercados Españoles (BME), the manager of the Spanish markets.
In 2022, Repsol paid its shareholders a total of 0.63 euros per share: in January 2023 it paid a cash dividend of 0.30 euros gross per share and in July another, also in cash, of 0.33 euros gross per share.
In addition, it carried out three capital reductions through the redemption of 200 million treasury shares.
Below you can see the evolution of Repsol's dividends over the last seven years:
Source: Repsol. Own graph prepared on 21 February 2023.
Repsol Key Data for 2024
The following table shows the most important data from Repsol's latest earnings report, corresponding to the 2023 financial year:
Net profit: 2785 million euros, 14% more than a year earlier.
Now that we know the oil company a little better, its fundamentals and how it rewards its shareholders, let's analyze Repsol's share price. This will help us to decide whether it is a good option to invest in Repsol.
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Repsol's share price is closely linked to the evolution of oil prices, as is logical. Thus, if the price of oil rises, Repsol's share price will rise, and vice versa. This can help us decide whether to invest in Repsol. In the following graph we can see how Repsol shares move in a very similar way to WTI oil over the last 15 years:
Source: Admirals MetaTrader 5. Weekly chart. Upper zone #REP; Lower zone #WTI. Data range: October 2007 - February 2023. Prepared on 22 February 2023. Please note that past performance does not guarantee future returns.
Let us now take a look at Repsol's long-term stock market chart on an individual basis and the effect that some of the events that have most affected the company's share price have had on its share price:
In the long-term monthly chart we can see, firstly, how Repsol shares plummeted first in 2008 and then in 2012 (pink rectangles). Why? In 2008, rumors of nationalization of YPF by the Argentinean government began, which led investors to lose confidence in the stock. They later managed to recover, but when the expropriation of YPF became a reality, Repsol shares suffered again on the stock market.
In the years that followed, the energy multinational's share price recovered, although it remained far from the heights it had reached in the early years of the new century. In 2015, once again, Repsol's shares plummeted on the stock market due to the coincidence of several events closely related to its business: the slowdown in the Chinese economy and, consequently, in demand, together with the fall in the price of oil. In addition, that year Repsol had bought the Canadian Talisman in the largest purchase by a Spanish company in the last five years.
Repsol shares began to recover at the beginning of 2016 and continued this upward trend until the end of 2018. In 2019, the share moves in a range of between 15 and 13 euros and plunges again at the end of January 2020 when the coronavirus reaches Europe. In parallel to the spread of the pandemic, different events affected the oil price until an unprecedented situation occurred on 20 April, with a contango effect.
Let us now zoom in on the chart and look at the daily evolution to see in detail what has happened in the last two years:
Source: Admirals MetaTrader 5. Daily chart #REP. Data range: September 4th, 2017 to January 24th, 2024. Prepared on 24 January 2024. Please note that past performance does not guarantee future returns.
The graph above shows, on the left, the general collapse of the markets due to the start of the Covid-19 pandemic. At the end of 2020, the price begins to recover and recovers what was lost due to the aforementioned collapse and even surpasses it, exceeding 16 euros per share. However, it does not manage to overcome this support and falls to 11 euros.
In September 2022, the price rebounded at this level and regained 15 euros, at which point it entered a sideways channel between 14.50 and 15.50 euros. As of January 23, 2024, the price is supported at 13 euros, at the bottom of a trading triangle. At this point, the price could bounce or fall to the next support, at 11 euros.
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The truth is that any recommendation to invest in Repsol will depend on the evolution of global geopolitical tensions and their effect on the oil sector.
On the other hand, we are talking about a stable company, with many years of history in the stock market and one of the companies with the highest dividend yield.
Those investors who are interested in the long term, can take into account that the share is currently cheap and therefore could potentially consider it a good move to include it in their portfolio. Moreover, if the company continues to diversify its energy business and maintains its commitment to clean energy, it will be less dependent on oil prices in the future.
Conclusion
Traders have two options with Repsol: invest or speculate. If you buy Repsol shares outright, you will get a stake in the share capital and voting rights in decision-making. The other option is to buy shares through CFDs or contracts for difference, which allows you to speculate on Repsol's share price.
CFDs allow you to use leverage, so you can open positions of considerable value with a small amount of capital.
But be careful, because just as leverage can increase your potential gains, it can also increase your potential losses.
Another advantage of CFDs is that they allow you to take advantage of both bullish and bearish scenarios - CFDs allow you to short sell to take advantage of a possible downtrend!
You can buy Repsol shares directly with the Admirals Invest.MT5 account or you can trade CFDs with the Trade.MT5 account.
To buy or sell Repsol shares just follow these simple steps:
Buy Repsol shares in 8 steps
Open a demo or live account.
Download the MetaTrader 4 or MetaTrader 5 platform on your PC, mobile or tablet to access the markets.
Log in to your MetaTrader trading account.
Once the platform is open, place the mouse arrow on the 'View' tab and click on 'Market Watch'.
A window will open on the left side of the chart where you can see the most traded symbols. If you cannot find the symbol you are looking for, go back to the 'View' tab and click on 'Symbols'.
A window will open. We can type the symbol we are interested in in the search engine. Select it and click on 'Show Symbol'.
The symbol will appear in the 'Market Watch' window, drag it to the chart and you will be able to see the price movement.
In the 'Tools' tab, click on 'New Order' and a window will appear in which we will have to choose volume, Stop Loss and Take Profit. Once chosen, we only have to click on Buy at Market or Sell at Market.
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