Is the BP share price set to rise to 1,000p?
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Having gained 23% in the last year, BP (LSE: BP) has clearly become a more popular share among investors. The stock has experienced a sudden rise which follows a period of intense challenges, with a lower oil price and the 2010 oil spill having weighed on its performance for a number of years.
Looking ahead, the stock could deliver impressive total returns. It still seems to be relatively cheap and may be worth buying alongside a FTSE 250 stock which reported positive news on Wednesday.
1,000p per share?
With BP trading at 580p per share at the present time, 1,000p per share seems to be a long way off. To achieve such a price level would require nearly three more years of the same level of capital growth that has been recorded in the last year, and this seems unlikely over the medium term. That’s because the last year has been an exceptional one for the oil and gas industry, with the oil price making a surprisingly high level of gain which is unlikely to be repeated for three further years.
That said, the prospects for the oil price continue to be positive. As ever, supply falls could cause an imbalance between demand and supply. With geopolitical risk in the Middle East continuing to be high, the prospect of periods of declining supply seems to be significant. As such, it would not be a major surprise for the price of oil to move closer to $100 per barrel over the next couple of years.
With BP trading on a price-to-earnings growth (PEG) ratio of 1.8, it seems to offer good value for money. As such, further capital growth seems to be possible – especially with it having a dividend yield of over 5%. While a 1,000p share price seems unlikely in the next few years, further investment in its asset base may make it a more realistic target over the long term.
Improving prospects
Also offering the potential for high levels of capital growth is recruitment company PageGroup (LSE: PAGE). It released an impressive set of half year results on Wednesday which showed that it continues to deliver on its growth potential.
Revenue increased by 12.8% to £751,6m, while operating profit was 18.8% higher at £67.2m. The company invested in 829 fee earners during the year, which represents an increase of 16.6% versus the prior year. This suggests that further growth could be ahead for the stock.
With PageGroup trading on a PEG ratio of 1.6, it seems to offer good value for money. The prospects for the world economy appear to be positive, and this could mean that trading conditions across the recruitment sector remain robust. With the stock having a forward dividend yield of 4.8%, it seems to offer a mix of income, growth and value potential. As such, now could be the right time to buy it.
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Peter Stephens owns shares of BP. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.