BP, Phoenix Group and Rolls-Royce are 3 shares Hargreaves Lansdown investors have been buying

BP shares have been attracting attention recently. But the oil giant’s not the only stock UK investors have been snapping up.

| 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.

Image source: Getty Images

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.

It’s always interesting to take a look at Hargreaves Lansdown’s ‘Top of the Stocks’ page. This highlights the shares the firm’s customers were buying the most in the previous week. Last week, three of the most bought shares were BP (LSE: BP.A), Phoenix Group (LSE: PHNX) and Rolls-Royce (LSE: RR.). So what’s been driving investors to these names?

BP

I’m not surprised investors have been piling into BP. Late in September, the shares experienced a sharp fall. Meanwhile, oil prices shot up last week on the back of the escalating geopolitical conflict in the Middle East.

Created with Highcharts 11.4.3Bp P.l.c. PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

I don’t have any plans to buy the shares however. For me, they’re just too unpredictable. If oil prices continue to rise, BP’s share price is likely to climb. However, if oil prices drop, the shares could experience further weakness.

Should you invest £1,000 in Bp (preferred Shares) right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Bp (preferred Shares) made the list?

See the 6 stocks

One other issue for me is that the company doesn’t seem to have a clear strategy. A few years ago, BP said that it was going all-in on renewable energy. Today however, the company appears to be scaling back its energy transition strategy. According to a recent Reuters report, it’s now targeting several new investments in the Middle East and the Gulf of Mexico to boost its oil output.

It’s worth pointing out that the shares are cheap. And there’s a decent dividend yield on offer (5.7%). As a long-term investor however, I think I can do better than BP.

Phoenix Group

Moving on to Phoenix Group, it experienced a pullback in the second half of last week. And investors clearly saw this as a great opportunity to buy the high-yield dividend stock (the yield today is 10.5%).

Created with Highcharts 11.4.3Phoenix Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

It’s worth looking at why the share price fell however. It seems to me that the driver of the weakness was a downgrade from UBS. In a note to clients, the firm downgraded Phoenix Group from Buy to Neutral and lowered its share price target to 530p from 610p. “Low solvency and high leverage remain risks to the investment case“, they wrote.

While debt here’s a risk, I might consider this stock if I was seeking income from my investments. Dividend coverage is low, which isn’t ideal. Yet the company’s generating plenty of cash. So the payout should be secure in the near term.

Rolls-Royce

Finally, it’s no surprise that investors were buying Rolls-Royce as this has been one of the most bought stocks for years now.

Created with Highcharts 11.4.3Rolls-Royce Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Now, I can understand why investors were piling into this stock two years ago when it was trading below £1. But today, the investment case isn’t so clear to me.

Yes, the company’s profits are rising rapidly, thanks to a brilliant business transformation from CEO Tufan Erginbilgiç. But a lot of success appears to be priced into the stock already.

At present, the forward-looking P/E ratio here’s 29.5, falling to 25.1 using next year’s earnings forecast. These are high multiples and they don’t leave much room for error (eg engine problems or an aviation slowdown).

Of course, the share price trend here’s clearly up. And trends can persist for a long time. For me though, the risk/reward proposition here isn’t enticing. Given the valuation, I think there are better shares to buy for my portfolio.

But what does the head of The Motley Fool’s investing team think?

Should you invest £1,000 in Bp (preferred Shares) right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Bp (preferred Shares) made the list?

See the 6 stocks

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.

Edward Sheldon has no position in any of the shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown Plc and Rolls-Royce Plc. 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.

Our best passive income stock ideas

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

artificial intelligence investing algorithms
Investing Articles

Up 272% in just a year, is Palantir stock just getting started?

This writer recognises that Palantir has grown its business very well -- but does the stock price offer him an…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

Up 50%? The Aston Martin share price forecast is mind-blowing! 

If analysts are right, the Aston Aston Martin share price could absolutely rocket in the year ahead. Harvey Jones says…

Read more »

Investing Articles

As the S&P 500 drops, here are 2 Stocks and Shares ISA holdings I’m watching

Our writer has different views on how President Trump's tariffs might affect these two US holdings in his Stocks and…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

£10,000 invested in Tesla stock at Christmas is now worth…

Tesla stock has been one of best-performing investments of the past decade. But things haven't gone to plan for investors…

Read more »

Investing Articles

Up 279% in 5 years, could Meta stock keep soaring?

Meta stock has more than tripled in five years. This writer sees lots to like about the business but also…

Read more »

Pink 3D image of the numbers '2025' growing in size
Investing Articles

25% total return in a year? Is now the perfect time to buy BP shares?

BP shares are on the front line of today's global economic and political uncertainty but analysts think they can still…

Read more »

Affectionate Asian senior mother and daughter using smartphone together at home, smiling joyfully
Investing Articles

With Cash ISA changes coming, could now be the time to consider buying shares?

Changes to the Cash ISA could lead to greater investment in the stock market. This could be a good thing…

Read more »

Investing Articles

These FTSE 100 dividend shares just got cheaper, thanks to President Trump!

Investors buying dividend shares can lock in bigger long-term yields when share prices take a tumble. These two just did…

Read more »