Is BP one of the best shares to buy today?

I think BP (LSE: BP) is one of the best shares to buy today, but not because of the company’s past performance. Instead, I’m focusing on its future potential. I believe it has tremendous scope over the next few years as it moves away from fossil fuels and focuses on renewable energy. 

One of the best shares to buy today

BP has outlined one of the most ambitious plans among big oil companies to increase its renewable energy production. It plans to establish a pipeline of renewable energy projects, with a total capacity of 20GW by 2025, and 50GW by the decade’s end. At the same time, the group’s planning to reduce its production of fossil fuels. 

It’s been ramping up renewable energy spending over the past two years. In 2020, the group paid £850m for a stake in two US offshore wind projects being developed by the Norwegian state energy company.

It also agreed to pay a record-breaking £462m-a-year to lease the Irish Sea’s seabed from the Crown Estate with its partner Germany utility EnBW. The lease gives the company scope to develop two offshore wind farms capable of powering 3.4m homes. 

Alongside these deals, the group has also acquired a pipeline of solar farms in the US. These farms have the capacity to power 1.7m homes. I think these actions prove the company’s really serious about hitting its renewable energy commitments. This is one of the main reasons why I rate the corporation as one of the best shares to buy today. 

However, it seems the market’s overlooking these commitments and only focusing on the company’s exposure to oil and gas. 

Indeed, shares in the group are changing hands at around 300p. That’s around the same level as April last year when the coronavirus pandemic was spreading worldwide. As the pandemic developed, the price of oil plunged below $20 a barrel. Today, the oil price is back above $70, but BP shares are no higher than they were this time last year.

Undervalued 

This indicates to me the market hasn’t really factored in the company’s recovery, nor its potential. This is why I believe the corporation is one of the best shares to buy today. With the oil price sitting at $70, the business is far more profitable today than it was in August of 2020. The stock doesn’t seem to reflect that. Nor does it appear to reflect BP’s push into renewables. 

Of course, the company may encounter plenty of risks as we advance. The price of oil could drop again, and it may face additional costs to compensate consumers for its polluting ways. Rising prices could also increase the cost of extracting oil and gas. 

Still, despite these risks and challenges, I believe the company’s one of the best shares to buy today. That’s why I’d add it to my portfolio. And while I’m waiting for the market to reevaluate the opportunity, the stock offers a dividend yield of 6.7%.