Based on Thursday’s numbers from index and industry peer Royal Dutch Shell, FTSE 100 oil giant BP (LSE: BP) is one stock I’ll be watching closely next month. Having said this, it’s not the only top-tier member I plan to check in on in August.
Earnings rebound
Earlier this week, Shell revealed a strong set of results. A sizeable recovery in earnings over Q2 was recorded, prompting free cash flow to soar. As one might expect, the BP share price rose by association. I wonder if there could be more to come in the next few days. The FTSE 100 titan is scheduled to provide an update on its second quarter on 3 August.
This is not to say that BP is a one-way bet. A rising oil price is beneficial, but last year showed how volatile a commodity like black gold can be. On a longer timeline, it seems inevitable that demand will drop as the cost of buying electric vehicles falls. BP’s need to adapt won’t come cheap either. This might help explain why the shares are still far below pre-pandemic levels.
On the other hand, one might say that a P/E of just 8 suggests these potential headwinds are already priced in, especially if the company ends up beating analyst expectations next week. Even if it doesn’t, I suspect income investors won’t lose sleep. BP currently yields a forecast 5.1%.
Hot market
York-based housebuilder Persimmon (LSE: PSN) also reports to the market next month. While we don’t know for sure what its half-year numbers on 18 August will be, we do know that UK property has been white-hot of late as more people show a desire to continue working from home.
I think the near-term performance of PSN will depend greatly on CEO Dean Finch’s commentary. Any suggestion that the withdrawal of stamp duty relief will impact trading at Persimmon could knock the share price.
Then again, it’s not as if Persimmon’s valuation looks stretched. As I type, the shares trade on a forecast P/E of 11. That still looks pretty cheap considering just how highly the company scores on quality-focused metrics. A temporary loss of momentum probably won’t bother dividend hunters either. Based on analyst projections, Persimmon offers a tempting 8% dividend yield. That’s among the biggest that one can find on the FTSE 100.
Supercycle beneficiary
A final FTSE 100 stock I’ll be following in August is copper miner Antofagasta (LSE: ANTO).
I’m not alone in being bullish on this company. Earlier this week, broker Peel Hunt upgraded the company based on its belief that supply of the red metal will remain restricted in 2022. This should keep copper prices high, boosting profits at ANTO. Looking further ahead, a mooted commodity ‘super cycle’ brought about by the green revolution could bring forth a raft of new investors.
To be clear, this is still risky stuff. Demand for metals such as copper is often correlated to perceptions of global economic health — clearly beyond ANTO’s control. As this month’s update showed, production is also variable and can be affected by weather as much as well as grades and recovery rates. This may help explain why shares have lost momentum over recent months.
All that said, a P/E of 15 looks reasonable to me considering how financially sound ANTO appears to be.
Interim numbers are due on 19 August.
