As I mentioned before, BP (LSE: BP) Stocks look cheaper than Company potential.. In the words of the company’s CEO Bernard Looney, the company is “Automatic teller machineAs it is Profit from high oil prices..
This can bring great benefits to investors. As profits flow, the company has enough money to reduce debt, increase dividends and even buy back more shares.
So I was wondering if I needed to buy £ 1,000 worth of BP shares in my portfolio to take advantage of the company’s growth potential.
BP will report $ 12.5 billion in revenue in 2021, according to current city analysts’ forecasts. This is the highest since the oil price plunge in 2014.
Profit could rise further in 2022. Analysts have raised their annual net income to $ 13.8 billion and their price-earnings ratio (P / E) to a multiple of 7.3.
Of course, these are just predictions. Oil prices are incredibly volatile. There is no guarantee that prices will remain at current levels for the next 12 months. If they drop significantly, analysts will need to revisit their forecasts. And investors who buy stocks because they think they look cheap compared to their outlook can also be overlooked.
Despite this risk, I’m optimistic about the potential of BP. What I’m excited about isn’t the company’s exposure to soaring oil prices. It’s about management’s ambitions for green energy.
BP aims to establish a pipeline of renewable energy projects totaling 20GW by 2025 and 50GW by the end of 2010. When the organization announced this goal, analysts speculated that it would be necessary to reduce shareholder returns or ignore other sections of the business to reach the goal.
With the surge in profits, BP will be able to return cash to investors, invest in green energy and reduce debt. In other words, I think the company is currently operating in a Goldilocks environment.
BP stock as income play
By investing in green energy, the company is preparing for the future. As this transition takes shape, I think the market will reward stocks with a higher valuation.
Indeed, companies exposed to the hydrocarbon industry are now receiving apathetic shoulders from investors. Meanwhile, the value of green energy stocks is skyrocketing.
BP appears to have the financial capacity to manage this change without reducing shareholder returns. With a dividend yield of 4.2% at the time of writing, this makes the company even more attractive to me.
There is room for this payment to increase, but given BP’s investment goals, I haven’t spent any money on it yet.
Overall, BP shares seem to me to offer growth and revenue potential in the coming years. So, as a long-term investment, I hope you can invest £ 1,000 in today’s stocks.
Rupert Hargreaves does not have a position in any of the shares mentioned. The Motley Fool UK does not have a position in any of the shares mentioned. The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, given the various insights, A better investor than us.
Is it a wise decision to buy £ 1,000 of BP shares?
https://www.fool.co.uk/2022/01/16/is-buying-1k-of-bp-shares-a-smart-decision/ Is it a wise decision to buy £ 1,000 of BP shares?