BP Share Price Forecast December 2021 – Time to Buy BP?
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Shares of British multinational oil and gas company BP (LSE: BP) are in the red, after closing at £337.85 as of December 24th (17:53 GMT). Over the past 12 months, BP shares have returned 26% excluding dividends. The shares are still trading around 20% below their pre-pandemic level despite the performance.
BP – Technical Analysis
BP’s financial statement indicates a market cap of £66.276 billion with total assets worth £212.509 billion. Revenue for the company for 2020 is at £140.65 billion with a profit margin of -11.26% compared to £218.22 billion in 2019. The company’s net income totalled $4 billion in 2019, which it has equated in the first quarter of 2021 alone.
Oscillators such as Relative Strength Index (14)(50.33), Stochastic %K (14, 3, 3)(52.63), Commodity Channel Index (20)(11.43), Average Directional Index (14)(17.39) and Awesome Oscillator(−5.48) are neutral. Moving averages such as Exponential Moving Average (10)(335.61), Simple Moving Average (10)(334.18), Exponential Moving Average (20)(336.75), Simple Moving Average (20)(336.88) and Exponential Moving Average (30)(337.59) are indicating a buy action.
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Recent Developments
Analysts largely believe that the world will begin to return to some sort of normality next year after two years of pandemic disruption. BP is investing heavily in its renewable energy business with its green energy division growing on a monthly basis. Revenue flow from this sector will be reflected in the top and bottom line by 2030. While investors have to wait several more years to see whether the company moves in the right direction, it is already showing progress.
BP’s increasing focus on renewable energy providers is proving a success. The two-pronged approach has allowed the company to be selective about what investments it takes on in the renewable space. It’s a long-term plan that will be facilitated by BP’s high-quality decisions and strong execution in the oil market in the short to medium term.
BP has hit some major milestones in recent years. Its renewable energy production is now hitting a projected 21GW/day. This includes offshore wind which is already at an impressive 3.7GW/day production level. BP also completed installing 10,000 EV charging points, which is a major milestone. All of these efforts form part of BP’s broader effort to be carbon neutral by 2050. While oil will still account for most of their revenue, the company is doing a great job in balancing both segments.
Should You Buy BP Shares?
There is no guarantee that investor confidence will return in 2022 and that BP’s profits will continue. 2022 can be marred with uncertainty, forcing the shares to underperform the market. BP could also face costly court battles and even potential fines if it continues to attract more unwanted attention due to its oil and gas industry exposure.
BP’s management has promised to return investors more cash through buybacks if profits continue to outperform its expectations. BP could add some support to the share price and attract income investors if it returns a healthy chunk of cash to shareholders.
BP shares are great for long-term investors. It is currently transitioning between sectors and pays 4.4% dividend. With a price-to-sales ratio of 0.7 and a price-to-earnings ratio of 11.58, the shares are cheap. Existing shareholders are getting diversity thanks to BP’s renewable investments. If a harsh winter can push oil prices even higher, it could push BP’s price back up to its highs. Considering this now is a good time to buy and hold BP shares.
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