Can BP plc, Amec Foster Wheeler PLC And Hunting plc Deliver 30% Gains in 2016?

Is it time to start buying BP plc (LON:BP), Amec Foster Wheeler PLC (LON:AMFW) and Hunting plc (LON:HTG)?

| 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.

Shares in these three companies have all fallen heavily over the last year, but does recent news suggest they may be poised for a comeback?


Shares in oil and gas equipment firm Hunting (LSE: HTG) rose sharply this morning after the firm declared a surprise 4 cent per share final dividend, taking the total payout for 2015 to 8 cents (around 5.7p).

It’s a far cry from last year’s 22p payout, but shareholders should take some comfort from today’s results. These show an underlying profit from continuing operations of $9.4m, down from $212.4m in 2014.

Hunting had a strong first half in 2015, as it cleared the backlog of orders from 2014. This helped to generate $118m of free cash flow and to reduce net debt to $110.5m from $131m at the end of 2014.

However, the second half of 2015 was fairly grim, as the firm’s pipeline of new business dried up. This morning, Denis Proctor, Hunting’s chief executive, said “We are in a wilderness without a single path to guide us”.

I suspect 2016 will be worse than 2015 for Hunting, but will it be the bottom? It’s too soon to say, in my view.


BP (LSE: BP) delivered a grim set of 2015 results, but there was one highlight. The dividend was held, at $0.40 per share. This is about 28.5p and gives a yield of about 8%, at the current share price.

Although BP may still cut its dividend, I believe there’s a good chance that the payout will be maintained. BP’s debt levels remain low. Big cuts to spending and further asset sales mean that cash generation remains fairly strong.

Assuming that oil prices start to recover within the next 18 months or so, I don’t see any reason why BP can’t maintain the dividend. The firm has certainly convinced the City that the payout will remain unchanged. The latest consensus forecasts for 2017 show a flat payout of $0.40 per share.

In my view, BP shares could easily rise by about 20% when the oil market starts to recover. Add this to an 8% yield and I think the stock looks a decent buy. That’s why I recently added BP to my own portfolio.

Amec Foster Wheeler

The risks seem higher at Amec Foster Wheeler (LSE: AMFW), but the firm does seem to be making progress in the wake of chief executive Samir Brikho’s January departure.

Amec shares rose by about 7% on Wednesday, after the firm said it had agreed a competitive new finance facility with its lenders.

Amec shares do look relatively cheap at the moment, at least based on analysts’ forecasts. The stock boasts a 2015 forecast P/E of 7.1, rising to a forecast P/E of 8.3 for 2016.

However, the fact that 2016 earnings are expected to fall is a potential warning flag. Amec’s net debt is also quite high, at £957m. This is the result of the Foster Wheeler acquisition, which completed at the start of 2015.

Amec was also forced to issue a profit warning and cut its dividend by 50% in November. Analysts are forecasting a further cut of 25% for 2016, alongside a 14% drop in profits. It could still be too soon to buy, in my view.

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.

Roland Head owns shares of BP. The Motley Fool UK has no position in any of the shares mentioned. 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

1 AI stock to buy and hold for 10 years

AI spending's expected to soar in the next decade, according to most experts. Here's one stock to consider buying to…

Read more »

Playful senior couple in aprons dancing and smiling while preparing healthy dinner at home
Investing Articles

Dividend deals! 2 passive income stocks that still look undervalued

Royston Wild explains why these FTSE 250 passive income stocks might STILL be too cheap to miss, despite theirrecent price…

Read more »

Middle-aged Caucasian woman deep in thought while looking out of the window
Investing Articles

Is BT Group one of the FTSE 100’s greatest value shares?

BT's share price looks like a bargain when you look at the P/E ratio and dividend yield. Is it one…

Read more »

Frustrated young white male looking disconsolate while sat on his sofa holding a beer
Investing Articles

The National Grid share price just plunged another 10%. Time to buy?

The National Grid share price is one of the FTSE 100's most stable, and nothing much happens to it? Well,…

Read more »

Young Black woman looking concerned while in front of her laptop
Investing Articles

Up 15% in 3 months, but I still won’t touch Vodafone shares with a bargepole

Harvey Jones has been shunning Vodafone shares for years. The FTSE 100 stock is finally showing signs of life, but…

Read more »

Growth Shares

This UK stock could be like buying Nvidia in 2021

Jon Smith thinks he's missed the boat with Nvidia shares, but flags up a UK stock that has some very…

Read more »

Businesswoman calculating finances in an office
Investing Articles

The FTSE 100’s Intertek delivers a bullish update — can the share price soar?

I’d describe Intertek as a quality business with a decent dividend income, but will the share price shoot the lights…

Read more »

Market Movers

Up another 10% yesterday, how high can the Nvidia share price go?

Jon Smith talks through the latest results but flags up why further gains could be harder to come by for…

Read more »