Shell’s £33+ share price is close to an all-time high, so why would I buy more as soon as possible?
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A shellThe (LSE: SHEL) share price continues to be supported by one of the most powerful engines of income generation in global energy. And its extremely strong balance sheet, asset base and capital-discipline profile place it firmly in the top ‘Oil Big’ category.
In addition, its 2025 results show the business can still throw away a lot of free cash even in a low oil price environment, as it happened in 2025. All this underlines that the strategic pivot introduced by CEO Wael Sawan last March is working well.
Apart from this, I think there is a gap between the firm’s price and ‘fair value’, where long-term investors can benefit. So, how much is it really?
Strong growth momentum
Shell’s share price will ultimately be driven by earnings growth, like all companies. The biggest risk here is any long-term volatility in oil and gas prices. However, analysts’ consensus forecasts that its profits will grow at an average of 7% per year until the end of 2028.
This outlook is well supported by its latest full-year 2025 results, which coincide with the strategic pivot revealed last March. It focuses on strong capital management and a sharp focus on high-return liquefied natural gas (LNG) and upstream assets.
Income attributable to shareholders rose 11% year-on-year to $17.8bn (£13.3bn), highlighting improved cash discipline and improved marketing margins. At the same time, current operating expenses fell by 2% to $35.032bn, reflecting the impact of Shell’s streamlining and cost reduction programme.
During that period, LNG sales volumes increased by 11% to 72.94m tonnes, underscoring Shell’s trading and development capabilities. New high-return LNG and upstream developments also advanced in 2025, strengthening the long-term production base that supports future earnings momentum.
This includes the approval of the Gorgon Stage 3 development in Australia, which adds long-life LNG volumes to an already expanding pipeline.
Taken together, these factors suggest that Shell’s structured portfolio and strategic direction are well positioned to support continued earnings growth.
How undervalued is the stock?
Price is not the same thing as price in stocks. The former is whatever the market will pay at any given time, while the latter represents the fundamentals of the business.
It is in the gap between the two that long-term investors can make big profits over time. This is because the prices of assets (including shares) can change to their ‘fair value’ over time.
The way to find the fair value of any stock is a discounted cash flow analysis. This indicates where any stock should be traded by projecting future cash flows and ‘rolling them down’ to today.
The DCF model of some analysts is more precise than mine, depending on the inputs used. However, based on my DCF assumption – which includes a 7.6% discount rate – Shell’s shares are 26% undervalued at their current price of £33.64.
That suggests a fair value for the shares of around £45.46. So that gap raises a very strong buying opportunity to consider today if those DCF theories prove to be accurate.
My investment idea
The combination of Shell’s sound strategy, world-class cash generation and clear valuation gap makes the stock a compelling prospect for me. As such, I will add it to my catch soon.
I’m also looking at some deeply discounted, high growth FTSE stocks.
