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.

sdf

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

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

How much does someone need to invest to target a second income of £15k – or £150k?

A second income from dividend shares? It's a well-worn path -- and this writer sees some attractions to the approach.…

Read more »

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

Could the stock market crash in the second half of 2025?

As the FTSE 100 hits a new high, could a stock market crash be coming? Our writer thinks there's a…

Read more »

Man hanging in the balance over a log at seaside in Scotland
Investing Articles

Start investing this summer with a spare £250? Here’s how!

Christopher Ruane explains how an investor with a few hundred pounds to spare and no prior experience could look to…

Read more »

Young female analyst working at her desk in the office
Investing Articles

Is Palantir stock the new Nvidia? Why UK investors should (or shouldn’t) care

Palantir stock’s the top performer on the S&P 500 this year. Should UK investors consider it amid a blistering AI-fuelled…

Read more »

Investing Articles

3 FTSE 100 shares I think look undervalued

The FTSE 100 may be hitting record highs but there are still bargains to be had on the index. I…

Read more »

Close-up image depicting a woman in her 70s taking British bank notes from her colourful leather wallet.
Investing Articles

£20,000 in savings? Here’s how to target £841 of passive income each month

Passive income plans don't need to be complicated. Our writer explains how someone could target a sizeable second income buying…

Read more »

Happy couple showing relief at news
Investing Articles

3 passive income strategies I like to try to double the State Pension with just £100 a month

Investing consistently, with diligence, and patience can lead to an impressive stock market income that puts the State Pension to…

Read more »

ISA Individual Savings Account
Investing Articles

£20,000 invested in a Stocks and Shares ISA 10 years ago could now be worth…

Stocks and Shares ISA investors have earned tremendous returns in the last decade, but just how much money has been…

Read more »