The Motley Fool

Should I buy FTSE 100 shares BP or Rolls-Royce for my ISA in July?

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.

macro shot of computer monitor with FTSE 100 stock market data in trading application
Image source: Getty Images

I’m currently on the lookout for top FTSE 100 stocks to buy this July. Should I buy one, both, or neither of these British blue chip shares for my Stocks and Shares ISA?

Should I ride the oil price recovery with BP?

Oil prices have risen strongly over the course of June on signs of tightening supplies. They’re up more than five-and-a-half bucks from $70 per barrel at the start of the month. And they’ve just touched their most expensive since October 2018. Does this momentum provide a good reason to buy shares in BP (LSE: BP) this July?

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Prices of the black stuff are rising as soaring demand drains fuel inventories. But I’m not convinced that oil will keep booming in a blow to profits at FTSE 100 firms BP and Royal Dutch Shell. It’s a matter of time before US shale producers plug their hardware back into the ground en masse to ride the economic recovery. OPEC+ producers will also be increasingly eager to end their supply curbs to make money from the rising commodity price.

I also worry about the future of Big Oil as demand for green energy takes off. BP has been making serious moves to bulk up its position in the renewables market more recently. And the Footsie firm has the clout to keep increasing its exposure here to deliver big long-term profits. But BP still has a mountain to climb to transition away from oil and make a splash with green energy. I’d rather buy pure-play renewable stocks to ride this theme.

A Rolls-Royce employee works on an engine

Is Rolls-Royce a better FTSE 100 stock to buy?

I’m not tempted to invest in FTSE 100 engineer Rolls-Royce (LSE: RR) next month either. The Covid-19 crisis is far from over and this continues to cast a pall over UK airline stocks and the companies that help them take to the skies.

Rolls-Royce said in May that large engine flying hours were around 40% of pre-coronavirus levels during in the four months to April. This is basically unchanged since the end of 2020 as lawmakers keep travel barriers up despite mass vaccinations. This stagnation is especially troubling given the huge amounts of debt Rolls-Royce has on its books. Net debt stood at £3.6bn in December.

I think the engine builder might tap investors for more cash or accrue more debt just to survive. Now it’s true that a bright long-term outlook for the aviation sector could mean big profits for Rolls-Royce in the years ahead. Mordor Intelligence reckons the commercial aircraft market will grow from $85.3bn last year to $194.5bn in 2026, driven by soaring air traffic in Asia Pacific.

But in my opinion the near-term risks to Rolls-Royce far outweigh the possible rewards over a longer time horizon. This is why I won’t be buying the engineer or its FTSE 100 colleague BP.

I'd much rather buy these top shares identified by The Motley Fool's team of expert stock finders.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Royston Wild 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.