Due to the tragic conflict between Russia and Ukraine, the price of oil has been soaring recently. In fact, it has recently hit around $120 per barrel, not too far from its all-time high of $147.50, which was reached in 2008. Despite this, the BP share price has still sunk 12% over the past month, mainly due to the forced disposal of its stake in Rosneft, the Russian integrated energy company. This is going to mean a $25bn hit for the company, due to unfavourable foreign exchange rates and impairment charges. But with the price of oil so high, will it be able to offset these losses, and can the BP share price now soar?

Recent events

The main news for the company revolves around the upcoming disposal of BP’s 19.75% stake in Rosneft. This disposal was due to the current conflict, and the pressure placed on the oil major by the UK government. However, as previously stated, BP is set to make huge losses on this disposal, as the current Rosneft valuation is far lower than before. Due to a current unwillingness to buy Russian assets, it will also be incredibly hard to dispose of and this may push the price down further. This is what has strained the BP share price over the past couple of weeks.

The decision to pull out of Russia also wipes out around half of BP’s oil and gas reserves, a third of its production and almost $1bn in annual dividends. Especially due to the current high price of oil (and the consequent lost profits for BP), alongside Rosneft’s incredibly low current valuation, this is clearly an unfortunate time to sell the business.

But I still feel it’s the right decision, both from a moral standpoint and for the long-term future of BP. Indeed, Rosneft’s strategy was to continue pumping oil for as long as the demand continued. In contrast, BP has started to pivot away from oil, upping its investment in renewable energy. While the oil price is currently extremely high, I don’t believe this is entirely sustainable. Therefore, for the long-term future of BP, this divestiture may be in the best interests of the group, even if it causes short-term pain.

Is the BP share price too low?

The BP share price is still nearly 30% lower than it was pre-pandemic, even though in 2019, underlying profits totalled $10bn, whereas in 2021, they totalled $12.8bn. This demonstrates that the BP share price may be severely undervalued, and based on profits alone, should be able to return to pre-pandemic prices. This is especially true considering that current high oil prices should boost profitability further.

Due to ambitious renewable energy targets, I also prefer BP to many other oil stocks, which seem far too dependent on just oil. This gives the company a long-term future in my view. But I’m still leaving BP on the sidelines. In the short-term, I worry that the Rosneft disposition may lead to further downside, and in the long-term, I prefer many pure renewable energy stocks.

Stuart Blair has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

I’m looking for the best penny stocks to buy after the recent stock market correction. War in Ukraine — and the severe macroeconomic consequences of the tragic conflict — have raised the risks for many UK shares. But I believe that stocks as an asset class remains an attractive place to invest my cash.

Remember that the average long-term investor tends to enjoy an annual return of around 8%. That’s even accounting for periods of extreme market volatility like we’re seeing today. With this in mind let me talk you through six top penny stocks I’m thinking of buying right now.

Staffline Group

I’d buy Staffline Group as a way to play the buoyant UK jobs market. That’s even though the impact of soaring inflation on the British economy could damage profits at cyclical shares like this. I believe conditions could remain strong enough for Staffline and the broader recruitment industry to thrive despite of recent developments.

Just this week, employment advice service ACAS reported that a weighty 41% of UK firms expect to raise their headcount in 2022. This bodes well for Staffline, a company which provides both recruitment and training services to businesses. Underlying operating profit at Staffline leapt more than 108% in 2021 as the jobs market bounced back from the pandemic.

Residential Secure Income

I believe Residential Secure Income could be an ideal penny stock in these uncertain times. Property shares like these provide investors with protection from rising inflation as the rents they charge often lift in line with broader prices.

What’s more, this particular UK share specialises in renting out residential properties. This is one of the most resilient parts of the real estate market, providing investors with added safety. We all need a place to live even when economic conditions worsen, right?

This earnings stability gives Residential Secure Income the means to pay above-average dividends year after year. City brokers certainly expect this theme to continue and it’s why the penny stock’s yields sit at 5.3% and 5.4% for the next couple of fiscal years.

My main concern for Residential Secure Income is that talk of rent controls is hotting up as the cost of living crisis worsens. This could naturally take a big bite out of future earnings.

Pendragon

I’m looking for the best electric vehicle (EV) stocks to buy as demand for these low-emissions vehicles soars. I believe car retailer Pendragon is one UK share that could also thrive as people switch from petrol and diesel to battery- and hybrid-powered cars. Recent Ofgem research suggests that as many as one in four British households plan to purchase an EV or a plug-in hybrid by 2026.

Companies like Pendragon — which has partnered up with 21 major auto manufacturers — will clearly have an important part to play in this green driving revolution. However, I am mindful of the threat that elevated commodity prices pose to sales of these next-generation vehicles. Analysts at Morgan Stanley have predicted that recently-soaring nickel values alone could add $1,000 to the price of an EV.

TheWorks.co.uk

I also think buying value retail stocks like TheWorks.co.uk is a good idea as the cost of living crisis worsens. This penny stock sells games, toys, books, craft items and stationery cheaper than much of the high street. Therefore, it stands to pick up customers as strained shopping budgets and money worries force people to shop around. The Centre for Economics and Business Research says household financial confidence has just slumped to 10-year lows.

As its name suggests, TheWorks.co.uk also operates an online channel too. This gives it the edge against many other value retailers and will allow it to capitalise on the relentless rise of e-commerce. A word of warning however. Like its customers, TheWorks isn’t immune to inflationary pressures either. It faces a steady rise in labour and product costs that threaten to take a big bite out of margins.

Sportech

I think technology business Sportech could enjoy splendid profits growth as the online gambling industry steadily grows. This penny stock provides the means by which gambling operators and lottery organisers carry out their operations. It also owns gaming and sports venues in Connecticut and operates digital betting services in the US too.

The problem with investing in firms like Sportech is the direct (and indirect) consequences of tightening gambling laws. New laws are a constant threat that could hit demand for its tech from gambling companies, for example.

But Sportech has recently benefited from the loosening of laws in the US and last year signed a 10-year partnership agreement with Connecticut Lottery Corporation to operate in the state. I think its presence in the fast-growing American marketplace could supercharge earnings growth.

Aquila European Renewables Income

Demand for green energy was soaring before 2022 on concerns over the environment. It seems as if the switch away from oil and gas to renewable sources will speed up too following the invasion of Ukraine by Russia. Spiking fossil fuel values in response to sanctions mean countries will seek greater control over their energy supplies.

This bodes well for Aquila European Renewables Income, a stock that owns clean energy assets primarily in Portugal and in Scandinavia. The problem is that while its portfolio includes several Portuguese hydropower assets, the wind and solar farms it owns are more unreliable ways of generating power. This means earnings can suffer in periods of calm weather. Fellow wind energy play SSE’s profit warning of last year illustrates the perils associated with these new forms of energy.

Still, as a long-term investor, I think the benefits of owning this share outweigh the possibility of temporary bottom-line issues. I think firms like Aquila European Renewables Income will have a critical role to play as Europe ramps up its green energy policy.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Pendragon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Who better to guide me on my portfolio that the sage of Omaha himself? I’ve decided to take a look at Warren Buffett’s recent stock picks and see if there’s scope to jump on his bandwagon.

The US market has disclosure rules for large investors. So it’s relatively easy to see what Buffett investment vehicle Berkshire Hathaway has been up to in recent months.

As a long term investor, his choices should be worth following. But, with retirement creeping closer and financial markets in turmoil, I’m keen to ensure I get in at the right price.

Focus on the oil sector

Some of the largest bets made by Berkshire in recent months have been in the oil sector. And what an investment that has been for Buffett.

The prices of his chosen stock picks, Chevron and Occidental, have already shot up. So it’s clear to me that I may have missed the boat on these shares.

A fintech growth stock

Warren Buffett also holds Brazilian fintech company, NU Holdings, which had a high profile IPO last year. Since its stock exchange debut at $9 per share, the price has dipped. This will have meant some losses for Buffett, but it’s worth remembering that he was invested in NU well before the IPO.

There are well known risks with such fintech companies. Profitability may be a long way off. It’s also clear that the Brazilian economy isn’t immune to major economic and political shocks. 

I’m backing Warren Buffett on this one though and with the shares sitting well below their IPO price, I think it could be a good time to buy some for my portfolio.

Storms ahead for Activision Blizzard

One investment that appeared too good to be true was Buffett’s acquisition of Activision Blizzard stock. Berkshire managed to pick up a juicy stake in the company at around $77 per share late last year.

Only weeks later it was announced that Microsoft was planning to buy the company at $95 per share — showing a massive paper profit for Berkshire Hathaway.

All is not well though. A high-profile workplace scandal plagued Activision last year. Added to this, the US government is now investigating alleged insider dealing around the Microsoft deal. 

With all this background noise, it’s a share I’m avoiding for the moment.

Formula 1 racing ahead

The last stock on my Buffett trail is the Formula One Group  (NASDAQ:FWONK), controlled by Liberty Media. 

The Formula One operating company was bought from Bernie Ecclestone back in 2017. At $8bn, the price tag was hefty, so what has Liberty done with its investment since then?

Adding to the number of races on the calendar has been one strategy. But what seems to be paying off best is the group’s focus on US consumers. 

The revamped US Grand Prix has been a great success. Increased on-track spectator numbers were mirrored by significant growth in its TV audience. 

There’s a downside though. Sanctions on Russia means that the Sochi Grand Prix is off this year. And sponsorships have also been cancelled.

I’m worried about the Russia-Ukraine situation from a purely humanitarian viewpoint. As an investor, I’m also worried that further conflict may cause other unforeseen difficulties for Formula One in 2022.

I’ll be avoiding this stock and focusing on NU Holdings to boost my retirement pot.

Fergus Mackintosh does not hold shares in any of the companies mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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I think investment trusts are one of the best assets to own to generate a passive income. These investment companies have an advantage over other assets because they do not have to pay out all of the income they receive from their portfolios every year.

They can save 15% of this income and take it into a revenue reserve. The trusts can then use some of the income they receive in good years and use it to cover shortfalls in bad years.

Thanks to the structural benefit, some investment trusts have consistently paid and increased their dividends for over 50 years. That is the sort of track record a few other companies and investment funds are able to achieve.

Investment trust for income

The F&C Investment Trust is one of these star trusts. Launched in 1868, it has paid and increased its dividend every year for the past 50 years.

And there is much more to this trust than its income credentials. Thanks to its diverse portfolio of investments, it has also achieved impressive capital growth over the past decade. Indeed, over that period, the stock has produced a total return of 207% for shareholders.

As touched on above, this return has come from a combination of income and capital growth. At the time of writing, the trust supports a dividend yield of 1.6%. That is not the highest yield on the market, but I am not particularly interested in finding the highest yields on offer.

I am looking for sustainable dividend yields. And F&C’s track record suggests its management is focused on sustainability as well as dividend growth.

Some of the holdings in the portfolio include some of the biggest companies in the world today. The top three holdings are Microsoft, Apple, and Google’s parent firm Alphabet. This provides the perfect mix of income and capital growth, in my opinion.

Passive income champion 

That said, there are some downsides to this approach. The primary one is the fact I cannot choose investments directly for the portfolio. The management team is responsible for selecting stocks, which could put me in a difficult position if they decide to buy a company I do not want to own. There is also an ongoing management charge of 0.6%. This could eat into returns if the outfit underperforms the market.

Despite these drawbacks, I think the company’s income credentials and exposure to growth stocks such as Microsoft is an incredibly attractive combination. That is why I believe this top investment trust is one of the best assets to buy today for my passive income portfolio.

As a way to build exposure to a diverse portfolio of international growth and income investments at the click of a button, I think the firm stands in a league of its own. 

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Alphabet (A shares), Alphabet (C shares), Apple, and Microsoft. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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Shares in FTSE 250 stock Ferrexpo (LSE: FXPO) have slumped a staggering 70% since Russia invaded Ukraine two weeks ago.

It is clear why investors have been selling shares in the company. The world’s third largest exporter of iron ore pellets has significant operations in Ukraine. It generates almost all of its iron ore pellet output in the country.

The war has already had a significant impact on the group. It has had to suspend all exports as Ukraine has closed its ports.

The risks of investing in this FTSE 250 corporation are clear. If the war continues and the export ban remains, the business is unlikely to generate any revenue for the foreseeable future. What’s more, there is a genuine chance the war could have a significant impact on its production facilities. If these facilities are damaged or destroyed, the company will be back to square one.

However, even after taking these risks into account, I think there is an opportunity here.

FTSE 250 opportunity 

The global iron ore market is still booming. Following the pandemic, companies and countries worldwide are spending heavily to try and increase production capacity and stimulate growth.

Whatever happens to the corporation, the demand for high-quality iron or pellets will remain high. As such, if there is a favourable outcome to the geopolitical situation in Eastern Europe, I think shares in the FTSE 250 business could recover strongly.

Indeed, before the crisis, City analysts were expecting the company to report earnings of $1bn for 2021. On a per share basis, that is $1.76, or 1.33p. Based on these targets, the stock is trading at a historical price-to-earnings multiple of just one.

Currently, analysts are expecting earnings per share to fall by around 50% in the current financial year. But even after this decline, shares in the company are selling at a forward P/E multiple of two.

I think these numbers illustrate the opportunity on offer. If there is a resolution to the geopolitical situation, the stock looks deeply undervalued at current levels. Over the past five years, the stock has traded at an average P/E of 5. It has also paid out a large amount of cash to investors via dividends. Ferrexpo’s dividend yield has hit 10% in previous years. 

Speculative growth play

Based on these figures, I think there is scope for the stock to double or even triple from current levels in the best-case scenario.

Still, there is no denying this is a high-risk investment. In the worst-case scenario, the shares could be worth zero. Therefore, I would buy the FTSE 250 company for my portfolio as a speculative growth play for the next few years.

However, I am not willing to devote a large percentage of my investment portfolio to the company, judging the risks involved. Still, considering the opportunity on offer, I am happy to buy a few shares.

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

On Wednesday I examined Evraz (LSE: EVR), eyeing up the possible long-term attractions of the low Evraz share price. The Russia-based steel producer claimed to be operating as normal, despite the effects of the Russian invasion of Ukraine.

But no sooner had my words been published than the London Stock Exchange suspended trading in Evraz shares. The reason? It’s all about Roman Abramovich.

Until Wednesday, Evraz maintained that for the purposes of sanctions regulations, it “does not consider itself to be an entity owned by, or acting on behalf or at the direction of, any persons connected with Russia and thereby caught by such legislation.” And the Evraz share price was steadying a little.

The company did admit that it could not be certain whether Mr Abramovich, along with several other major Russian shareholders, would be legally considered connected with Russia in terms of those new sanctions laws.

Abramovich sanctions

The UK government has now clarified that uncertainty.

Mr Abramovich has had assets frozen and is subject to travel bans. And a subsequent run on the Evraz share price led to the temporary suspension, by the Financial Conduct Authority, of Evraz share trading.

For its part, Evraz has reiterated that it “does not consider Mr Roman Abramovich as a person exercising the effective control of the company“.

With the market in Evraz shares halted, the price finished the day at 80.9p, down 12.6%. Had business continued as usual, I wouldn’t like to guess where the chart might have ended.

Free market suspended

I applaud the FCA’s suspension of Evraz shares. I support letting share prices go where they will when all information is open to all shareholders. But when a legal action interferes with the free market, and regulatory effects on the share price are not known, I think it is only right to suspend trading until legal outcomes are clarified.

To get back to my opening thought, on what investors need to know. I don’t think anyone can know anything more, right now, about the regulatory fallout from the sanctions on Abramovich. For now, shareholders simply need to sit it out and wait.

There is no way to buy or sell shares on the open market anyway, so I don’t see any practical point in worrying about that. Worry is, however, understandable.

Evraz share price future

This is pure speculation on my part now. But I hope that the wide international ownership of Evraz shares will lead the UK government to go easy on the company itself. Seize the stockholdings of Abramovich and any other Putin associates, sure. But don’t harm other shareholders who will surely almost universally oppose Russia’s war?

What do investors need to know about the long-term outlook for the Evraz share price? I think that still comes down to what I was saying Wednesday.

And that’s all about the fundamental performance of the company, the outlook for the steel business, and the timescale for Russia’s aggression to be defeated and Russia-based companies to return to respectability. We have no way to quantify much of that right now.

Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Markets are uncertain at the moment. UK stocks have seen some big gains and losses over the last week as investors have reacted to the invasion of Ukraine.

My approach to this terrible situation has been to do almost nothing with my share portfolio. But a recent sale means I have some cash in my  top-rated Stocks and Shares ISA that I’m keen to put to work. To help me pick wisely, I’m following these tips from Warren Buffett.

Is it risky to buy now?

UK share prices have been all over the place in recent weeks. Many were already falling in January. I think there’s a good chance we’ll see further declines over the coming months.

However, I’m not trying to call the bottom of the market. What I’m doing is looking for individual UK stocks which I think offer good value.

Paying the right price is something Buffett has often talked about. He has two tips for the current situation. The first is that investors should always look for a “margin of safety”, aiming to buy a company for less than it’s worth.

His second piece of advice is that “it’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price”.

Buying shares always carries the risk of future losses. But if I pick well, buying UK stocks today should help me to lock in future passive income and capital gains. Staying in cash means I’ll miss out on both of these.

What I’m buying

Buffett says it’s important for investors to recognise their “circle of competence”. He notes that “the important thing is not how big the circle is. The important thing is staying inside the circle”.

This certainly rings true for me. I’m always careful never to dive into a new stock just because it’s popular, or moving fast. When I’ve broken this rule, I’ve usually lost money.

Given the uncertain market conditions today, I think Buffett’s ideas are more important than ever. To help manage my risk, I’m focusing on companies I’m already familiar with. Often, this means buying more shares in businesses I already own.

Alongside this, I’m also looking for one or two new stocks to replace companies that have recently left my portfolio. Although these will be new stocks for me, I’m focusing my search on companies and sectors that I’m already familiar with and have followed for some time.

UK stocks: a buyer’s market?

Over the next week or two, I’m planning to spend most of the cash that’s built up in my ISA account. Will this be a wise decision? You’ll have to ask me in a few years.

As Buffett once said: “I buy on the assumption that they could close the market the next day and not reopen it for five years.”

I’m not looking for short-term share price gains. Instead, I’m hoping to buy into good companies that I can continue to own for many years into the future.

Roland Head has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.