The BP share price is up 7% in a month but still looks great value with a P/E of 5.73 and 5.67% yield!

Harvey Jones took advantage of this year’s dip in the BP share price to load up on the FTSE 100 oil and gas giant. He hopes this will pay off in 2025 and beyond.

| 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.

The BP (LSE: BP) share price has had a rough ride but lately it’s been showing signs of life. It’s up 7% in the last month, although that still leaves it down 13.9% over one year.

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

I’m pleased by its modest progress, because I bought BP shares on 18 September for 411p and averaged down at 392p on 22 November. I’m still underwater at today’s (15 December) price of 395.75p but only by around 3%.

Should you invest £1,000 in Coca-cola 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 Coca-cola made the list?

See the 6 stocks

This oil giant is starting to recover

I don’t have any spare cash to invest, but if I did, BP would be high on my shopping list. Yet I still think BP could be in for a tough 2025.

Anybody who fell for the hype around ‘peak oil’ – the suggestion that at some point we’d run out of accessible oil – has learned to be wary about forecasting energy price movements. The shale revolution killed that theory.

Lately, all the talk has been about ‘peak demand’, as renewables give oil and gas a run for their money.

On 3 December, the Bank of America forecast that oil will average around $65 per barrel in 2025, amid an oversupply of crude and slowing demand as countries shift toward cleaner energy and transportation.

Yet on 12 December, the International Energy Agency hiked its 2025 global oil demand growth forecast from November’s 990,000 barrels per day to 1.1m, citing “the impact of China’s recent stimulus measures”.

Markets are forecasting all sorts of things about US President-elect Donald Trump’s impact on the oil price, but I’ll stop there. That way madness lies. Nobody can second-guess stock market movements, just as nobody can second-guess the oil price.

This is a cyclical stock and events will turn

So I’ll go back to first principles, and here they are. First, commodity stocks are famously cyclical Trading at a remarkably low price-to-earnings ratio of 5.73. BP appears much closer to the bottom of the cycle than the top. At that valuation, the shares look too cheap for me to ignore if I had the cash.

Second, the way to combat short-term price volatility is to buy shares with a long-term view. I don’t know whether my BP shares will smash it in 2025, 2026 or whenever. Yet I believe over the long run that the world still needs oil and if it doesn’t, BP will adapt to the energy transition.

Third and finally, a high yield helps compensate for short-term instability. As BP shares flounder, the yield has climbed up to 5.76%. That’s comfortably above than the FTSE 100 average of 3.58%. I’ll reinvest every penny while I wait for my BP shares to lift off.

I may still be wrong. The race to renewables could destroy oil demand faster than we think. Oil company stocks are always just one way accident away from meltdown. The fatal explosion on the BP’s Deepwater Horizon drilling platform in the Gulf of Mexico in 2010 hammered BP’s shares for a decade.

It may be risky but the potential rewards are high. I would buy more at today’s price but sadly, I don’t have the money right now.

5 stocks for trying to build wealth after 50

The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.

Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

Claim your free copy now

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.

Bank of America is an advertising partner of Motley Fool Money. 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.

Pound coins for sale — 51 pence?

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?

See the full investment case

More on Investing Articles

Investing Articles

Up 30% in weeks, does the BAE Systems share price still offer value?

The BAE Systems share price has been on a tear over the past couple of months. This writer sees limited…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Hunting for shares to buy as the market trembles? Remember this!

After a choppy week in global stock markets, our writer goes back to basics in his hunt for bargain shares…

Read more »

Investing Articles

3 simple principles to help build wealth in an ISA

As a new tax year opens up new ISA allowances for many investors, our writer shares a trio of things…

Read more »

Investing Articles

US trade tariffs: what they could mean for UK shares like Ashtead, Compass Group, and Experian

US trade tariffs continue to rock global markets, and the UK is no exception. Our writer considers how a new…

Read more »

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Dividend Shares

The Trump slump has smashed these FTSE 100 shares!

After a rough week for US and UK shares, investors have been shaken. But now these FTSE 100 stocks have…

Read more »

Investing Articles

£10,000 invested in Rolls-Royce shares 5 years ago is now worth…

Rolls-Royce shares have been on fire since April 2020. Part of this is the result of pandemic restrictions lifting, but…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

£10,000 invested in Tesla stock at its peak in 2024 is now worth…

Over the last few months, Tesla stock has lost nearly half its value. Here, Edward Sheldon explores a few takeaways…

Read more »

Investing Articles

Is the S&P 500 heading for an epic stock market crash?

Our writer shares his thoughts on a very crazy time for the S&P 500 and the wider stock market. How…

Read more »