At first glance, the Unilever (LSE: ULVR) share price has had a good year. It’s up 25% over the last 12 months.

Yet lately the excitement’s worn off. It’s barely shifted in recent months. Normally, that wouldn’t worry me. I buy shares like this with a much longer-term view.

My problem is this. Despite holding the stock, I’ve never quite shaken off the view that it’s lacking oomph. Yes, it boasts a vast range of popular everyday brands such as Dove, Domestos, Hellmann’s and Knorr, but where can it go from here?

Can this FTSE 100 stock fight back?

In recent years, management’s been involved in a lot of navel-gazing, as it works out how to control its sprawling empire. It’s worked hard to drive greater value out of its products, such as focusing on its 30 ‘Power Brands’. But is this FTSE 100 defensive favourite too solid for its own good?

CEO Hein Schumacher’s trying to streamline operations, targeting key growing markets like India and ditching non-core brands such as Unox and Zwan.

Yet his efforts haven’t won over investors. On 6 January, RBC Capital Markets downgraded Unilever to Underperform over fears it will undershoot its 2% volume growth target. It’s struggled to top 1% over the last decade. RBC also said Unilever’s underinvesting in its product portfolio, which could hamper growth.

This isn’t the only reason the shares have struggled. With interest rates expected to stay higher for longer, many investors have decided to stick to cash and bonds to preserve their capital, rather than FTSE defensives. While Unilever’s at the safer end of the stock spectrum, its share price can still be volatile.

Unilever has a solid track record of long-term dividend growth. However, today’s trailing yield of 3.22% can be beaten by a simple savings account.

That could swiftly change if interest rates fall. On that front, there’s a little more optimism. Some analysts reckon the Bank of England could cut base rates four times this year, to kickstart the ailing UK economy. That would definitely give Unilever a jolt.

Is it time for me to sell?

The danger is that inflation stays higher for longer than we’d like, whipped up by Donald Trump’s corporate tax cuts and trade tariffs. That will drive up input costs, squeezing margins. Given the mixed prospects, the shares don’t look brilliant value, trading at 21 times earnings.

As a big global company, Unilever has been targeted by campaigners over climate change, pollution, Gaza and the war in Ukraine. It only got round to selling its Russian business last autumn. It’s also been on the end of a lawsuit from its own subsidiary Ben & Jerry’s, which alleged it was silenced over its support for Palestinian refugees.

Schumacher’s battling to cut costs and recover lost market share. Yet I can’t say I’m hugely excited by the opportunity here. Right now, I’m short of cash to buy shares that excite me. Selling Unilever could be the way to raise it. I’m certainly tempted.

The easyJet (LSE:EZJ) share price fell 5% in early trading today (22 January), despite issuing a positive trading update for the first quarter (three months ended 31 December) of its 2025 financial year.

Getting into the detail

The reaction was surprising to me given that passenger numbers were up 7% compared to the same period in 2023. This translated into a 11% increase in revenue. And largely due to lower jet fuel prices, operating costs per kilometre flown fell 4%.

Historically, the airline makes a loss in Q1. However, this narrowed by £65m, to £61m. Encouragingly, the company also said that “current booking trends are supportive” of it meeting analysts expectations for FY25.

After an hour or so of trading, the share price recovered a little. However, it was still lower and suggested that investors were unimpressed by the update. Perhaps they didn’t like the hint – and I wouldn’t put it any stronger than that – of softer revenues.

The press release said: “Q2 underlying unit revenue trends are modestly lower than Q1 due to our capacity investment on longer leisure flows.”

Maybe some thought it was time to bank their profits. The airline’s share price has increased 23% since its 52-week low of August 2024. However, in my opinion, I think there’s plenty to be cheerful about.

A helicopter view

That’s because I believe wider industry trends will help the airline. The International Air Transport Association expects 4bn more flights by 2043, with an anticipated annual growth rate of 2.3% in Europe.

And if Donald Trump carries through on his promise to “drill, baby, drill”, world oil prices will start to fall. This can only be good news for easyJet. During its first quarter, fuel costs accounted for 24.5% of group revenue.

Closer to home, there could also be some positive developments for the industry. If recent reports are to be believed, the government looks set to approve additional runways at Heathrow and Gatwick and give the green light to expansion at Luton. This could be significant for easyJet as it has bases at the latter two.

Despite environmental concerns, increasing airport capacity is seen by many economists as an effective way of stimulating growth. And if the UK economy could grow like easyJet’s done over the past 30 years, I don’t think there’d be many complaints.

Founded in 1995, it started with two aircraft flying from Luton to Glasgow and Edinburgh. Today, it has nearly 350 of them. And it has medium-term ambitions to grow its profit before tax to over £1bn — the current FY25 consensus forecast is £709m.

But there are risks. The aircraft industry’s notoriously difficult and faces numerous financial, operational and environmental challenges. The pandemic illustrated how vulnerable the sector can be.

However, from what I can see, easyJet looks to be in good shape. I believe it’s well placed to benefit from the expected increase in demand for air travel. And it recently reinstated its dividend which — although modest — is an indication its directors have confidence in the future direction of the business.

For these reasons, I’m going to keep an eye on the company and revisit the investment case when I’m next in a position to buy some shares.

Traditional energy companies have been buoyed by rising prices and Donald Trump’s pro-oil US presidency at the start of the year. In this market climate, high-yield UK stock Harbour Energy (LSE: HBR) might be an option to consider for those eyeing returns as well as price appreciation.

Admittedly, the field of energy companies wooing investors is very competitive these days. It doesn’t help that Harbour Energy grabbed headlines due to its North Sea exposure. Operators, like the company, were clobbered last summer with heavy taxation by the UK’s Labour government for North Sea production.

But there’s more to the company and its performance.

Not just the North Sea

At the start of 2025, Harbour Energy remains the largest London-listed independent oil company. It has a geographically diverse portfolio comprising assets in Argentina, Mexico, North Africa and Southeast Asia. These sit alongside assets in Germany, and British and Norwegian North Sea holdings.

The company’s current global production level is around 475,000 barrels of oil equivalent per day, enabling it to offer income-chasing investors a near 8% yield.

A well-respected board and CEO Linda Cook have overseen its expansion over the last four years via both organic and acquisitive growth. Their latest strategic play was the acquisition of Wintershall Dea last year for $11.2bn.

Operational discipline

In the six months to January, marked by declining oil prices, Harbour Energy saw its share price fall by around 5%. But over the same period, this compares favourably with its peers along with UK majors Shell and BP, with both posting declines of 3% and 6% respectively.

The first three weeks of January also saw Harbour Energy’s share price rise by 11%, bringing it close to the 300p mark. It hit a 52-week high of 333p in May before oil price volatility and changes to North Sea taxation knocked investor confidence.

Harbour Energy has since been trying to regain it. The company’s net debt has decreased significantly in recent years. It expects to have a net cash position by the end of 2025. Unsurprisingly, dividends have slowly but steadily increased since March 2022.

Market rumours are also rife about Harbour Energy moving its primary listing to the US, giving the energy stock further positive vibes. The company has dismissed the rumours. Instead, it is pursuing an investment-grade credit rating (i.e. bond or other form of debt vehicle / security with a low default risk), through financial and operational discipline.

What’s not to like?

There is a lot to like about Harbour Energy, but caution is still merited. As trading in 2024 demonstrated, direction of oil and gas prices will impact the company’s share price no matter how operationally disciplined it is.

A US listing, should it happen, is not always a one-way ticket to a higher valuation, as Diversified Energy Company recently found out. Some may also find Harbour Energy’s risk versus reward profile to be too timid or conservative, with other small-to-mid sized oil and gas stocks offering greater potential for price appreciation.

On balance, this high-yield energy midcap UK stock with a low risk profile strikes the right note for me, and I will be adding more of it to my portfolio.

Most of the time, investors buy a cheap stock because they’re hoping for the share price to rally. This is perfectly fine. Yet undervalued stocks can also be used when it comes to trying to target a second income. Here’s how.

Falling prices, rising yields

A dividend yield‘s the most common way to compare stocks that pay out income. The calculation looks at the dividend per share relative to the current share price. So let’s say that a share’s cheap due to a fall in the price. One impact of this (assuming the dividend per share hasn’t changed) is that the dividend yield will have risen. Therefore, targeting cheap stocks can provide a potentially enhanced yield for income investors.

However, it’s not as simple as that in practice. Investors need to dig deep to understand if the fall in the stock’s due to internal problems that could cause management to cut the dividend. For example, if the share price has fallen and the company’s struggling to pay debts and has poor cash flow, this wouldn’t be a smart purchase.

Yet if the drop’s due to a short-term factor such as slightly weaker results than expected or as part of a wider sector or market drop, the future dividends might not be impacted.

A property example

Urban Logistics REIT‘s (LSE:SHED) a stock to consider. The share price has fallen by 10% over the past year, helping to push up the dividend yield to 7.21%.

I’d call the stock ‘potentially cheap’ due to the fact that the share price trades at a 34% discount to the net asset value (NAV) of the business. What this means is that the managers have a portfolio of logistics warehouses and other commercial property. At any point in time, this portfolio has a NAV. In theory, the share price should be similar to this NAV. However, differences can happen due to investor sentiment or other factors. But in the long run, the current discount should decrease.

Investors will like the fact that it has high-quality tenants, usually large companies in the logistics space. DHL is the biggest tenant. This should prevent large default risks as these are well-established firms. However, one risk is that it’s quite concentrated on this sector. This is unlike some other REITs that are exposed to a wide variety of commercial tenants.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Income potential

If an investor took advantage of cheap shares with an average yield of 7%, income could build over time. If £350 was invested each month, after a decade the pot could be worth £61.3k. In the following year, without adding any cash, this could pay out £357 in an average month.

This isn’t guaranteed and peering this far into the future is definitely not an exact science! But the strategy of buying undervalued income stocks can be a winner.

Legal & General (LSE: LGEN) shares have one of the highest dividend yields in the FTSE 100 index right now. Looking at the forecast for 2025, they’re currently sporting a whopping yield of 9.4%.

Of course, in share investing there’s no such thing as a ‘free lunch’. So what’s the catch here?

The truth about high-yield stocks

When a stock has a really high yield, it’s typically a sign that large institutional investors are sceptical. These sophisticated investors are generally avoiding the stock (which has led to a lower share price and higher dividend yield).

If they weren’t skeptical, they’d buy the stock to take advantage of the income on offer. This would most likely push the share price up and lower the yield.

What’s the problem here?

So the question is – why are institutional investors avoiding Legal & General shares today? What’s lurking under the bonnet?

Well, the issue could be uncertainty in relation to the gilt (UK government bond) market. You see, Legal & General’s a major player in the LDI (liability driven investment) space. LDI involves projecting future liabilities (of a pension scheme, etc) and then generating returns from available assets (equities, bonds, gilts, gilt derivatives, etc) to meet these liabilities.

Now, when the gilt market’s volatile (like it has been recently), things can go wrong for companies that operate in the LDI space. That’s because they can face margin calls on their gilt derivative positions (meaning that they need to stump up more capital to hold on to their positions).

So there’s some uncertainty in relation to the Legal & General’s balance sheet and liquidity position (and future dividend payments). This could be a key factor behind the lack of interest in the stock at the institutional level.

Low dividend coverage

It’s worth pointing out that in recent years Legal & General’s dividend coverage ratio (the ratio of earnings per share to dividends per share ) has fallen to rather worrying levels. For 2024, it’s expected to be 0.87 (meaning earnings won’t cover dividends). This could be interpreted as a red flag. A ratio under one suggests the dividend payout may not be sustainable.

Share price volatility

Another risk factor for institutions could be general share price volatility. According to my data provider, Legal & General shares have a ‘beta’ of 1.65. This means that they are around 1.65 times as volatile as the broader market. In other words, if the UK market was to fall 10%, this stock could fall 16.5%.

This volatility adds risk as it could potentially offset any returns from dividends. It’s worth noting that there are plenty of dividend stocks with much lower betas. For example, National Grid and Unilever have betas of around 0.4, meaning their share prices are considerably less volatile than the market. Typically, institutional investors like lower volatility stocks because they’re responsible for protecting other investors’ capital.

Worth the risk?

So are Legal & General shares worth the risk? That’s hard to say. The 9.4% yield certainly looks attractive at more than twice the FTSE 100 average. But this is a relatively volatile stock. And there are no guarantees the company will continue to reward investors with massive dividends.

So it’s important to weigh up risk versus reward. They could be worth considering for income, but they stay on my watchlist for now.

The Diageo (LSE: DGE) share price has experienced a dramatic collapse over the last three years, falling more than 40%. I’ve experienced this nasty decline first hand as I own the FTSE 100 stock in my Stocks and Shares ISA.

Can shares in the Johnnie Walker and Guinness owner recover in the years ahead? Or is this stock now dead money? Let’s discuss.

Why’s the share price fallen?

First, let’s recap why the shares have tanked. There are a few reasons including:

• A slowdown in its major markets after the pandemic (when people spent a lot of money on top-shelf booze)
• Excess inventory problems, particularly in Latin America
• Concerns that younger generations are drinking less alcohol
• Concerns that GLP-1 weight-loss drugs like Wegovy and Ozempic are reducing demand for alcohol
• More focus on the link between alcohol and cancer
• Lack of confidence in the new management team (legendary CEO Ivan Menezes died in mid-2023)
• Rising bond yields (dividend stocks like this tend to lose some appeal when bond yields are higher)

Overall, the company’s faced quite a few challenges.

Is a recovery on the cards?

As for whether the shares can recover, this issue seems to divide opinion.

There are still plenty of investors that are confident in the long-term growth story here. A good example is British fund manager Nick Train, who runs the Lindsell Train UK Equity fund. At the end of 2024, Diageo was the second largest holding in his fund (9.9% of the portfolio). He continues to back in the power of Diageo’s brands and believes the company’s worth a lot more than its current value (£54bn).

On the other hand, there are investors who believe the company’s likely to struggle going forward. An example here is Terry Smith, who runs the popular Fundsmith Equity fund. Last year, he sold his entire holding in Diageo after holding the stock for more than a decade. He cited problems with the new management team and also said the emergence of GLP-1 weight-loss drugs has changed the outlook for the company (although he’s still invested in Jack Daniels owner Brown Forman).

We suspect the entire drinks sector is in the early stages of being impacted negatively by weight-loss drugs
Fundsmith portfolio manager Terry Smith.

My glass-half-full view

Personally, I’m cautiously optimistic that the shares can recover over time. I believe many of the current issues (consumer demand, excess inventory, etc) are relatively short-term in nature.

In relation to GLP-1 weight-loss drugs, I’m not totally convinced they’re going to significantly reduce demand for booze. Although I will admit there’s some uncertainty here.

That said, I’m concerned about demand from younger generations. This is the biggest risk with the stock, in my view. Recently, I read that 36% of UK adults under 25 say they’re non-drinkers. That’s quite a high figure.

The good news is that Diageo continues to hike its dividend payment. Currently, the shares are yielding about 3.6%. This means that while I hold my shares I’m being paid to wait for a recovery in the share price. Of course, there are no guarantees it will recover, so I’m putting money into lots of other stocks to hedge my bets.

The International Consolidated Airlines Group (LSE: IAG) share price has had a stellar year. Its shares have rocketed 128% over the last 12 months. That’s the fastest growth on the FTSE 100.

Usually, when a share does that well, I stand clear. Basically, I feel like I’ve missed the excitement and should look elsewhere for my next recovery play.

But then I think of aircraft engine maker Rolls-Royce (LSE: RR). After years of turmoil, its shares took off in the autumn of 2022. In the first 12 months of the recovery phase they shot up around 175%.

I had a small stake and was tempted to buy more. Instead, I decided the fun was over. But I was wrong. They grew another 200% the next year as more investors piled in.

I need to rethink momentum stocks

The Rolls-Royce share price has now slowed. It’s up ‘just’ 95% over the last 12 months. I’ll hold what I have but won’t buy more. But is there still time to hop on board IAG?

Both IAG and Rolls-Royce took a severe beating in the pandemic when global fleets were grounded. But with the skies reopening and miles flown returning to pre-Covid levels, their fortunes have rebounded.

Rolls-Royce flew first, given an extra boost by the appointment of transformative CEO Tufan Erginbilgiç. His shock therapy sent a charge through investors who had grown accustomed to years of underachievement.

IAG doesn’t have a Erginbilgiç. Which may be one reason why it’s lagged. Its shares were dirt cheap for years, trading around three or four times earnings. Many investors were put off by the company’s debt pile, but that’s under control at around €6bn, and falling. Now momentum’s building.

Transatlantic routes are particularly strong, which is good news for IAG’s flagship brand British Airways. US bullishness under Donald Trump may help here. European brands Iberia and Aer Lingus are trailing, albeit picking up.

The IAG board’s been working hard to cut costs, and profits margins are improving with leaner operations and higher load factors.

I’m expecting more growth

There are risks, of course. Airlines are plugged into wide and global economic sentiment. If inflation and interest rates stay high and consumers feel poorer, demand could fall. The same could happen if the ‘Trump bump’ reverses now he’s in power.

The oil price has also nudged up to $80 a barrel. If it rises higher, that will squeeze IAG’s margins.

Yet IAG shares still look good to go with a price-to-earnings (P/E) ratio of just 7.7. That’s roughly half the FTSE 100 average. Today’s share price of 330p is roughly 25% below the pre-Covid peak of 435p.

By contrast, Rolls-Royce shares are pricey with a P/E of more than 43 times. I think its rapid recovery phase is over. There are challenges ahead, amid technical issues on its Trent 1000 engines and the battle to win regulatory approval for its mini nuclear reactors. Starting from a lower base, I think the IAG share price ceiling’s much higher.

With no cash in my portfolio, I’ll have to sell something. Once I’ve identified which stock goes, I’ll buy IAG. So to answer my own question, yes, I do think it could do a Rolls-Royce. No guarantees, of course.

There’s no hiding the fact that many UK companies bring in the majority of their revenue from the US. Most however, aren’t those on the FTSE 250. It’s the more internationally-focused FTSE 100 companies that typically have headquarters around the world.

Still, there are a few outliers on the secondary index — and when it comes to growth, their smaller market-caps work in their favour. Of course, it’s too soon to assess where the US economy will go under Trump. But if it booms, I think investors should consider these two stocks for their growth potential.

4imprint Group 

4imprint Group (LSE: FOUR) markets promotional merchandise like branded stationary, USB drives and apparel. Despite being based in London, the 40-year-old company derives 97% of its revenue from the US. Some of its stand-out featured brands include US giants Nike, Camelbak and Sharpie.

However, its drop ship distribution model faces risks from third-party service disruption. This can be costly and cause reputational damage. Still, the company has enjoyed spectacular success in the past 10 years, with the stock growing at an annualised rate of 21.4% a year. 

In its latest trading update, it expects pre-tax profits of $153m for the 2024 full-year, exceeding expectations. Released earlier this week (21 January), the update also outlines revenue expectations up 3% and a 5% rise in existing customer orders. The shares jumped 12% on the news.

Despite the rapid growth, it’s still trading at 32% below fair value based on future cash flow estimates. Reinforcing that estimate, the average 12-month analyst forecast eyes a price 30% above current levels.

Hill & Smith

Highways construction firm Hill & Smith (LSE: HILS) provides engineering solutions and galvanising services in the US. Following the country’s introduction of a $1.8trn infrastructure bill in 2022, Hill and Smith’s products have enjoyed surging demand.

The stock price has shot up by over 100% since. Consequently, it has a slightly higher-than-average price-to-earnings (P/E) ratio of 20. Still, I think there’s more room for growth.

While the company suffered from surging debt before Covid, this has been decreasing although it still outweighs cash flow. That leaves a risk of defaulting if profits slip and it struggles to cover interest payments.

Recently-appointed CEO Rutger Helbing believes the company “has excellent prospects for further value creation” and there’s “strong demand for our products and services, particularly in the US.“

On 5 January, it paid a dividend of 16.5p per share to shareholders, up 15% from the previous period. This follows a 20% increase in revenue and a 39% rise in earnings. The yield now stands at 2.9%.

It could go either way!

While a booming US economy could help both these stocks, there’s a chance Trump’s tariffs send things the other way. That’s a key risk, besides the usual ones of foreign exchange fluctuations and regulatory changes. 

Taking into account the current valuations, I think the rewards here could outweigh the risks. In the coming years, both these stocks could climb much higher than today so I think they’re both worth considering right now.

Each year, more and more Britons choose to take advantage of the tax breaks offered by an ISA. Whether the goal is to save for a house or earn a second income, it’s an increasingly popular option.

Those with some market knowledge and a higher risk appetite often opt for a Stocks and Shares ISA. This allows the investor to pick their own assets, from commodities and bonds to stocks, shares, and investment funds.

Unlike a Cash ISA with a fixed interest rate, the returns from a Stocks and Shares ISA depend on the investor. Finding the right balance between risk and return is critical.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Estimating returns

One of the easiest ways to aim for a steady return is by investing in an index tracker. The FTSE 100 has delivered annual returns above 6% on average for the past 20 years. The S&P 500 has done even better, returning more than 10% on average per year.

Both options would have returned more than a Cash ISA over the past decade. That said, both indexes have experienced years of significant losses, which can be difficult for risk-averse investors to stomach.

To bring in £3,000 a month (£36,000 a year), a portfolio returning 10% on average would need £360,000 invested. It would take over 25 years to reach that amount by investing £300 every month and compounding the returns.

By picking individual stocks and following a well-formulated strategy, it’s possible to outperform an index tracker. However, this can increase the risk of losses.

Switching to dividends

Income investors often switch to high-yielding dividend stocks once their desired level is reached. The goal is to secure a regular, stable income regardless of market fluctuations.

The UK market is particularly favourable in this regard, with many stocks regularly yielding over 6%. The ideal stocks here are those with long dividend track records and low volatility.

With that in mind, investors may want to consider the UK’s largest bank, HSBC (LSE: HSBA). It has a yield of 5.9% and low volatility — below 1% in the past month. Its size and international reach add to its stability, shielding it from localised economic troubles.

That said, it’s seen a fair share of problems. In the past, the bank has been accused of inadequate risk management and failure to tackle fraudulent behaviour. Now, it’s considering a split between its East and West departments to better manage operations. This ambitious plan may be costly and could hurt profits if things don’t go smoothly.

But for now, things are going well.

HSBC is far from the top dividend payer in the UK but has an excellent track record of payments. This type of reliability is important when aiming for income. Moreover, the stock has grown at an average of 8% per year over the past five years.

When adding dividends to that, returns could be upwards of 14% at times. With those averages, a portfolio of only £250,000 would be enough to draw down £3,000 a month. 

However, that would be very difficult to maintain in the long run. With a well-diversified portfolio of UK income stocks, an investor could aim for a 6% average yield and annual growth of 4% to 5%.

FTSE 100 commodity giant Rio Tinto (LSE: RIO) is down 13% from its 20 May 12-month traded high of £58.51. I already own shares in the firm but am considering buying more based on the ongoing energy transition.

I believe the shift to net-zero emissions may take longer than many think. But the move looks to have developed an unstoppable momentum, which I believe is a good thing. And without wishing to be mercenary about something so important — if I can make a profit from this, all the better.

What’s the investment rationale?

Wind, solar, water, and geothermal clean energy sources require huge quantities of metals to be turned into power.

For example, a single offshore wind farm requires six times more steel per megawatt of power generated than traditional thermal coal plants, according to HSBC. Copper and lithium are also used extensively in each of these clean energy sectors.

The International Energy Agency estimates that to achieve net-zero emissions by 2050, the world will need to triple its renewable energy capacity by 2030.

This indicates to me that a dramatic scaling up in the production of these key commodities is on the cards.

Where does this firm fit in?

Rio Tinto targets significant output increases in iron ore (used in steel), copper and lithium in the coming years.

Specifically, it aims to increase its iron ore production by 5m tons annually to the end of 2025. Currently, it is around an average of 323m-328m tons a year.

It also targets a rise in its annual copper output by the same point to 780,000-850,000 tons from 660,000-720,000 tons. By 2030, it targets 1,000,000 tons a year of production.

And the firm now controls the world’s largest lithium resource base following its 9 October $6.7bn purchase of Arcadium Lithium.

How undervalued are the shares?

This deal – and its huge presence in iron ore and copper – makes Rio Tinto a global leader in energy transition commodities.

A risk in the stock is that the energy transition significantly slows for some reason. This would delay the benefits of the investments it has made to that end.

However, analysts forecast it will generate a return on equity of 16.8% by the end of 2027.

The key question for me now is whether the shares look undervalued as well.

On the price-to-earnings ratio of stock valuation, they trade at just 9.1 compared to a competitor average of 18.1. So they look very cheap on this basis.

The same is true of its 1.8 price-to-book ratio valuation against its peer group’s average of 2.7. This is also the case on the price-to-sales ratio, where it trades at 1.8 compared to a 2.1 competitor average.

A discounted cash flow analysis shows the stock is 30% undervalued at its present £50.95 price. So its fair value is technically £72.79, although market unpredictability may push it lower or higher.

Will I buy more shares?

Given its presence in energy transition commodities and its undervaluation, I think it is at least one of the best stocks in the sector.

It also offers a high yield of 6.7% right now, compared to the FTSE 100 average return of just 3.6%.

Consequently, I will be buying more shares in the firm very shortly.