Looking back on my trials and tribulations as a private investor, I often conclude that the best time to buy shares in a company is when sentiment and news flow are at their lowest ebb. Indeed, I find my most successful purchases to have been made when the market has all but lost faith in the company and prospects seem to be at their worst.
As a long-term investor I can, of course, afford to take some short-term pain so long as there is long-term potential. For instance, a share price that goes nowhere for a year does not bother me at all so long as I know it is likely to be higher in a few years’ time.
This brings me neatly onto the topic of BP (LSE: BP) (NYSE: BP.US), which is the subject of yet more negative news flow. This time it is an allegation that a trading team at the company moved natural gas through a pipeline linking two Texas hubs to manipulate prices in the aftermath of a fairly severe hurricane in 2008.
The accusations are being made by the US Federal Energy Regulatory Commission and were contained in an order demanding the company pay $28m to resolve the case.
Of course, BP denies any wrongdoing and, although it is only a small amount, it is yet another negative piece of news flow following the continued issues the company is having with the aftermath of the Deepwater Horizon oil spill.
So, I’m now very interested in buying shares in BP!
For me, doing so is nigh on a no-brainer. For starters, the yield is impressive at 4.6%, while a price-to-earnings (P/E) ratio of 7.8 is dirt cheap. Indeed, this compares very favourably to both the FTSE 100 and oil and gas industry group, which trade on P/Es of 14.9 and 12.6 respectively.
Clearly, BP is an attractive income stock. However, there is another high-yielding gem of a company that I would recommend you take a look at by clicking here
It’s best described as The Motley Fool’s Top Income Stock For 2013 and really is worth a look if you’re concerned about low savings rates and inflation.
> Peter owns shares in BP.
