Is BP a Good Buy Now?

BP stock has lost over a third of its value as it tries to cap the Gulf oil well and some investors and analysts are claiming that the price makes a good entry point for those looking to get in cheap with the added benefit of a dividend yield near 8%. BP can be hugely profitable, but be extremely cautious if you are looking to buy shares of this company.

The expense to cap oil well and pay for the cleanup and compensate seafood industry workers and others impacted by their inability to fish the Gulf will be enormous, but BP can handle those costs. They can also handle the cost to litigate any civil and criminal lawsuits and pay damages if they are found liable. The greater danger is in the societal and political implications and ultimately the cost impact of being branded an evil-doer as Dubya would say.

Several congressmen have already said that it is incomprehensible that BP continue to pay a dividend until the depth of their liability is known and the gulf tragedy continues. There are calls for Tony Hayward, their CEO, to resign and that BP should be broken up and sold.

BP may in fact be a good buy, but a smart investor will wait until the picture becomes clearer before making a bet on BP.