Is the BP share price set to rise to 1,000p?

Does BP plc (LON: BP) offer further share price growth potential?

| 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.

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.

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.

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.

More on Investing Articles

Investing Articles

Here’s how I’d aim for a ton of passive income from £20k in an ISA

To get the best passive income from an ISA, I think we need to balance risk with the potential rewards.…

Read more »

Abstract bull climbing indicators on stock chart
Investing Articles

2 FTSE 100 stocks I’d buy as the blue-chip index hits record highs

This Fool takes a look at a pair of quality FTSE 100 stocks that appear well-positioned for future gains, despite…

Read more »

Satellite on planet background
Small-Cap Shares

Here’s why AIM stock Filtronic is up 44% today

The share price of AIM stock Filtronic has surged on the back of some big news in relation to its…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

At a record high, there can still be bargain FTSE 100 shares to buy!

The FTSE 100 closed at a new all-time high this week. Our writer explains why there might still be bargain…

Read more »

Asian man looking concerned while studying paperwork at his desk in an office
Investing Articles

After profits plunge 28%, should investors consider buying Lloyds shares?

Lloyds has seen its shares wobble following the release of its latest results. But is this a chance for investors…

Read more »

Abstract bull climbing indicators on stock chart
Investing Articles

Something’s changed in a good way for Reckitt in Q1, and the share price may be about to take off

With the Reckitt share price near 4,475p, is this a no-brainer stock? This long-time Fool takes a closer look at…

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

This new boost in assets might just get the abrdn share price moving again

The abrdn share price has lost half its value in the past five years. But with investor confidence returning, are…

Read more »

Young Black man sat in front of laptop while wearing headphones
Investing Articles

As revenues rise 8%, is the Croda International share price set to bounce back?

The latest update from Croda International indicates that sales are starting to recover from the end of 2023, so is…

Read more »