Can the filthy cheap BP share price rocket in 2025? Here’s what the experts say

Harvey Jones took advantage of a tough year for the BP share price to add the stock to his portfolio at a reduced price. Is the sun set to shine on the FTSE 100 oil giant?

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The BP (LSE: BP) share price has had a tough 2024 and looked too cheap to me to resist. So I bought the FTSE 100 oil and gas giant in September and November at what I thought was a bargain valuation of less than six times earnings.

I’m down 7.7% so far but given that I aim to hold the stock for years and ideally decades, these are early days.

Long-term BP investors will have had it tougher, with the shares down 18.93% over 12 months. The trailing yield of 5.95% will only partially offset that loss. The obvious culprit is the oil price, with Brent crude falling 6.36% in 2024 to $71.04 a barrel.

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

Can this FTSE 100 stock rally hard next year?

BP is more than just an oil producer, but its shares still correlate closely with energy prices. We saw that during the 2022 energy shock when they rocketed.

Where oil goes next is anyone’s guess. There are so many variables at play. US President-elect Donald Trump has pledged to ramp up shale production next year. By boosting supply, Trump could drive the price lower. Although if he gets the US economy motoring again, this could drive up demand. But a trade war could drive it back down.

Trump has pledged to bring peace to Ukraine. If he manages that, Russian oil and gas could flow into Europe again, driving down prices. But what if he doesn’t?

Then there’s Saudi Arabia. In September, there were rumours that it would open the spigots to recover lost market share, driving prices even lower. Yet last week, OPEC+ delayed the beginning of its production increase and slowed the pace of the output hikes.

I’ve just read on Oilprices.com that natural gas prices are set to surge this winter “due to a combination of high demand, tight supply, and limited production increases”. And I haven’t even mentioned the green transition.

Will the shift to renewables smash fossil fuel prices? Or will falling oil and gas prices smash renewables? That’s a biggie for BP in particular, as it rows back on its ‘Beyond Petroleum’ strategy, and returns to familiar fossils territory.

It’s all too much for my little brain. So what do the experts say? On Friday (6 December), Morgan Stanley predicted Brent crude would average $70 a barrel in the second half of 2025. If correct, that won’t light a fire under the BP share price.

Yet the 26 analysts who offer one-year share price forecasts are optimistic. They’ve set a median target of 505.8p, up 34.25% from today. That seems optimistic but I hope they’re right. Of these, 11 call it a Strong Buy, four name it a Buy while 14 say Hold. Only one says Sell.

I can justify my decision to purchase BP on diversification grounds. I didn’t hold any energy stocks. Plus its shares were dirt cheap. And the dividend is high and rising. Next year it’s forecast to hit 6.3%, covered exactly twice by earnings.

Personally, I don’t know where BP shares will go in 2025. Nobody does. But given the low valuation and high yield, I’m happy to go along for the ride.

But there may be an even bigger investment opportunity that’s caught my eye:

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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.

Harvey Jones has positions in Bp P.l.c. 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.

Like buying £1 for 51p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

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