The Motley Fool

Why I’m watching the Centrica share price closely now

The Centrica (LSE: CNA) share price had a good run this past week, breaking past the 80p mark for the first time in four months after it released a somewhat upbeat trading update. This is very good news for the FTSE 100 share, which has been struggling for a while.

But I believe that it will take more than a single trading update to lift the share price meaningfully, especially after seeing how much it has fallen over the years. To put it in context, the CNA share price has lost over half its value from five years ago. It’s also at a fraction of the highs it has seen over the decade.

No capital gains here

The loss in value was one of my biggest concerns when I first wrote about CNA in May this year. For investors like me, who invest for capital gains, Centrica’s trend isn’t comforting at all. It is one of the reasons why I decided at the time that it was a better idea to hold off from investing in CNA and put it on my ‘wait and watch’ list instead.

Make no mistake, this latest spike in price is a movement in the right direction for the energy supplier. Nevertheless, the share price is a whole 13% lower than when I first talked about it.

Certainly, I wouldn’t buy Centrica shares right now, and I won’t until it has shown some consistent upward price movements. The key question is, to my mind, whether to even keep it on the ‘wait and watch’ list. To me, that depends on how it’s performing right now and how it’s expected to perform going forward.

Promise of better times

The latest trading update contains a few positives about the business, like growth in total customer accounts, higher margins and…. acceleration of cost efficiency delivery”. It also reports that CNA is on track to achieve full-year targets. A case to made for the stock, if a good dividend yield makes you tick. For me, Centrica is still on my ‘wait and watch’ list.

But while we are waiting and watching, may I suggest some shares that are far more predictable in their share price trajectory? Unilever is one I like, because it has given huge capital gains in the past. It’s also a defensive share, being in the business of consumer staples. I have been focusing on this segment in the past days as macroeconomic uncertainty persists.

With its big presence across international markets, Brexit (or the more-likely Brexit limbo) isn’t about to rock its fortunes. Unilever’s share price has also fallen in November so far, making now a good time to invest in this high-quality share.

A top income share with a juicy 6% forecast dividend yield

Income-seeking investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this out-of-favour business that’s throwing off gobs of cash!

But here’s the really exciting part…

Our analyst is predicting there’s potential for this company’s market value to soar by at least 50% over the next few years...

He even anticipates that the dividend could grow nicely too — as this much-loved household brand continues to rapidly expand its online business — and reinvent itself for the digital age.

With shares still changing hands at what he believes is an undemanding valuation, now could be the ideal time for patient, income-seeking investors to start building a long-term holding.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Income Share… free of charge!

Manika Premsingh has no position in any of the shares mentioned. 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.