Trading BP's 14% Surge Post Earnings Report
So far this year, energy companies have managed to outperform broader stock market indices, largely due to the rise in oil prices and energy supply constraints.
This has also led to a bumper year for energy companies such as BP which reported its highest quarterly profit in more than a decade in the first three months of the year of $6.2 billion.
Learn more about analysts’ outlook for BP shares and how to trade it below.
|Symbol for Invest.MT5 Account:||BP|
|Date of Idea:||11 May 2022|
|Time Line:||1 - 12 months|
|Entry Level:||GBX 431.00|
|Target Level:||GBX 491.00|
|Position Size for Invest.MT5 Account:||Max 5%|
- The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.
All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing.
Why Trade the BP Share Price?
The recent surge in energy prices has led to profitable earnings from most major oil companies. In BP’s latest earnings report the oil giant reported a profit of $6.2 billion due to “exceptional oil and gas trading.”
However, these profits have also prompted calls for a windfall tax to help UK households with the current cost of living crisis. A windfall tax is a charge on companies that have benefited from something they were not responsible for.
So far, the UK government have argued against such a tax but the Chancellor of the Exchequer has stated it will be a possibility if energy companies do not properly reinvest these profits. So far, the investors are taking this risk in their stride with BP shares up 20% this year (at the time of writing).
With energy prices forecasted to rise even further, investors have – so far – chosen to focus on energy companies rather than other stock market sectors. Even Warren Buffett bought a billion dollars worth of stock in US energy company Occidental Petroleum this year.
BP has also announced some investor incentives such as share buybacks, a plan to invest £18 billion in green and fossil fuel operations and increase its annual dividend 4% until 2025.
Analyst Forecasts for BP Shares
According to analysts polled by FT.com, there are currently 4 buy, 15 outperform, 6 hold, 1 underperform and 0 sell ratings on the stock.
Of the 21 analysts offering a 12 month price target for BP’s share price, the highest price target is 715.96, the lowest price target is 383.52 with a median price target of 491.36.
Source: FT.com, 10 May 2022
An Example Trading Idea for the BP Share Price
An example trading idea for the BP share price forecast could be as follows:
- Buy the stock on a break above GBX 431.00 to allow for current market volatility.
- Target the median analyst price target of GBX 491.00.
- Keep your risk small at a maximum of 5% of your total account.
- Time Line = 1 – 12 months
- A move to the median price target level would result in a near 14% potential gain.
- Some investors may choose to target the highest analyst price target level of GBX 715.00 which is around the all-time high price level and would result in a near 66% potential gain over a much longer period of time.
It’s wise to remember that the share price is unlikely to go up in a straight line and it may even go much further down before it rises. The energy market and oil stocks tend to be more volatile than other blue-chip stocks.
Therefore, be sure to exercise good risk management which is one of the most important aspects of trading successfully. You should always know how much you could potentially lose on a trade and the risks involved.
How to Buy BP Shares in 4 Steps
With Admirals, you can buy BP shares and other UK companies with a competitive commission of just 0.1% of the trade value and a low minimum commission of just GBP 1.0.
- Open an account with Admirals to access the Trader’s Room.
- Click on Trade on one of your live or demo accounts to open the web platform.
- Search for BP at the bottom of the Market Watch window and drag the symbol onto the chart.
- Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level.
Source: Admirals MetaTrader 5 Web. Past performance is not a reliable indicator of future results, or future performance.
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Do You See the BP Share Price Moving Differently?
Remember that all analytics and trading ideas are based on the personal view and experience of the author.
If you believe there is a higher chance that a stock price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provides.
The Trade.MT5 and Trade.MT4 account allows you to speculate on the price direction of stocks and shares using CFDs.
This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this How to Trade CFDs article.
INFORMATION ABOUT ANALYTICAL MATERIALS:
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- The Analysis is prepared by an independent analyst, Jitan Solanki (analyst), (hereinafter “Author”) based on their personal estimations.
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