Is it time to buy post-Brexit winners BP plc (+47%), Glencore plc (+161%) and Standard Chartered plc (+55%)?

Is it too late to buy BP plc (LON: BP), Glencore plc (LON: GLEN) and Standard Chartered plc (LON: STAN)?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

While the FTSE 100 has been steady overall since the EU referendum, and despite an immediate drop has bounced back pretty much unchanged to 6,696 points, many of its constituents have been in turmoil. Should we buy the shares that are on the rise?

Oil still a bargain

Oil giant BP (LSE: BP) has seen its shares gain 17% since 23 June, to 452p, and they’re up 47% since their 2016 low point on 11 February. Part of the reason has been the recovering price of oil, of course, although Brent Crude has dipped back to $47 per barrel from over $50. But the latest spike is a direct result of the post-Brexit ‘flight to safety’, so are BP shares still worth buying at their higher valuation?

The long-term value of BP is entirely independent of whether the UK is a member of the EU or not, and so hasn’t really changed between 23 June and today. And I reckon the strong buy case for BP is unchanged by the recent price rise. Fundamentals don’t mean much this year, but forecasts for 2017 value BP shares at 15 times predicted earnings. Those forecasts have been strengthening over the past three months, with a pretty strong buy consensus on the shares now.

But the killer reason to buy, for me, is those tasty dividends that should yield over 6%. BP has repeatedly said it doesn’t want to cut its dividend, and with oil price prospects looking good over the next 18 months, I’d say it’s looking increasingly safe.

Miners too

The mining sector is the other obvious one that’s utterly indifferent to local politics of places like Europe, and it has also benefited from the rush to invest cash anywhere that doesn’t look risky. Shares in Glencore (LSE: GLEN) have gained 21% since the day of the vote, to 185p, and are up 161% since their lowest this year on 20 January.

It’s not all Brexit, as Glencore was already making firm progress in its recovery plan, disposing of assets to get its massive debt pile down to manageable levels. And with the outlook for worldwide demand and the price of commodities brightening, Glencore’s long-term future is looking safe.

The P/E multiple on Glencore shares is still a bit daunting, mind, at 47 based on this year’s expectations and dropping only as far as 33 on 2017 forecasts — and that’s without any meaningful dividends. A P/E to earnings growth ratio (PEG) of 0.7 based on 2017’s forecast 46% rise in EPS looks attractive, but that could well be a post-recovery one-off. A solid company, but I think I’d wait a while.

A bank, really?

Banking has been hard hit, with Lloyds Banking Group down 22% since the referendum and Barclays down 20%. But Asia-focused banks like Standard Chartered (LSE: STAN) have bucked that trend — its shares are up 4% since 23 June and 55% since 11 February.

With its top-level management team shaken up and serious steps being taken to turn its fortunes around, Standard Chartered could be an attractive long-term bet. While forecast pre-tax profits will still be well below those from recent years, after we’ve seen a decline from £6.85bn in 2012 to a £1.5bn loss last year, the £1.2bn profit pencilled-in for 2017 would drop the P/E down to under 16.

Whether the potentially lower risk makes Standard Chartered a better buy now than Lloyds or Barclays on forward P/E values of 8, that’s for you to decide.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft owns shares of Lloyds Banking Group. The Motley Fool UK has recommended Barclays and BP. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »