I think Tesco (LSE: TSCO) shares could be one of the best investments to own in the current environment. That is why I would buy £5,000 of the stock for my portfolio today. 

There are many reasons why I think this company is better positioned than other institutions to ride out all of the uncertainty and unpredictability dominating the current economic climate. 

First, and possibly most important, as the country’s largest food and drink retailer, the firm has a captive market. As long as humans need to eat and drink, there should be a need for the company’s services. 

However, with costs rising across the board for consumers and companies, demand for certain products could fall. This is where I think Tesco really comes into its own.

Competitive advantages 

The enterprise has one of the largest logistics networks in the country. Its networks of trucks, trains and depots give it a unique competitive advantage over peers.

For example, several years ago the company started running trains from Spain full of produce to reduce costs and improve efficiency. The initiative has worked so well Tesco is expanding the network. 

Thanks to this competitive advantage, management has announced that Tesco will try to keep food costs as low as possible for consumers. The company’s heavy investment in its infrastructure also means it can lower staffing costs through efficiency initiatives. 

As well as these qualities, the corporation is incredibly diversified. It has a financial services business and mobile telecoms arm. Both of these divisions offer existing customers special benefits. This is another reason why Tesco is a consumer favourite. I think these benefits will draw consumers into the company at a time when bills are rising elsewhere. 

That is not to say that the company is completely immune from the general pressures affecting the UK economy. It will have to foot the bill for rising energy prices and wage pressures. These may have an impact on its profit margins. The UK grocery sector is also incredibly competitive, and there are signs of a price war brewing. Tesco will have to ensure that it keeps prices as low as possible to maintain its relationship with customers. 

Tesco shares valuation 

The firm is likely to face some challenges as we advance, but I think Tesco shares look cheap considering the group’s competitive advantages.

At the time of writing, the stock is trading at a forward price-to-earnings (P/E) multiple of just 12.8. It also offers a prospective dividend of 3.8%. I think that looks appealing in the current interest rate environment.

Meanwhile, the company’s five-year average P/E ratio is around 17 suggesting the shares are selling at a discount to their long-term average. 

So overall, considering Tesco’s competitive advantages, the company’s current valuation, and future prospects, I think the stock is worth buying for my portfolio today. 

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesco. 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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BAE Systems (LSE: BA) shares have really woken up over the past couple of weeks. With countries around the world hiking their military spending, it is easy to see why investors are buying into this sleeping giant. 

However, I do not want to buy a stock based purely on the impact of what is clearly a human tragedy unfolding in Europe. I have actually been a supporter of the business for a long time. I have been attracted to the company’s long contracts with customers and its portfolio of unique technologies. These qualities could act as a competitive advantage. 

I think it is more important to focus on these advantages rather than short-term issues. And as long as they are in place, I believe the company remains an attractive opportunity. I would be happy to add it to my portfolio. 

The outlook for BAE Systems shares 

The news that countries around the world are starting to increase their military spending is good news for defence contractors like BAE Systems. 

But these commitments tend to be influenced by politics, making them quite unpredictable. There is no telling what will happen over the next couple of years and if these commitments will remain in place. 

So instead of focusing on short-term developments, I focus on a company’s existing strengths. In the case of BAE Systems shares, this means the quality of the firm’s technology and existing contracts with clients. 

BAE is one of the largest defence contractors in the world, with one of the largest portfolios of defence technology. It is a primary supplier for the Ministry of Defence, and the government owns a golden share in the business. This effectively gives it the ability to veto any corporate actions it does not agree with. 

Competitive edge over peers

BAE’s prominence in the UK defence market gives it an edge over other global competitors when bidding for contracts. The company has a global client base supplying militaries all over the world from the Middle East to Australia. The corporation also has a growing cyber security and intelligence business. This arm should help future-proof the enterprise as emerging threats in the cybersecurity space become more of an issue. 

Despite these attractive qualities, the corporation is exposed to some unique risks. The global defence industry is highly regulated and controlled. BAE needs to stay on the right side of regulators to maintain its presence in the market. If it falls foul of these rules, it could be cut off from its customers. At the same time, this market is quite competitive. The group has an edge over some of its peers, but it has to work flat out to maintain this advantage. 

Even after taking these risk factors into account, I think the company’s desirable qualities make BAE Systems shares a desirable addition to my portfolio. These qualities coupled with rising military spending around the world could help the stock outperform the market over the next few years. 

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.

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Around a week ago, I wrote an article on the BP (LSE: BP) share price highlighting five reasons why I thought the stock was undervalued. One of the factors I highlighted was the company’s stake in Rosneft, one of Russia’s largest oil producers. Last year, the stake yielded $1bn in dividends for the UK-based oil group. 

The events that have unfolded over the past week have wholly obliterated my thesis. BP’s outlook has now changed significantly. The company has announced that it will be dumping its Rosneft position incurring a potential cost of $25bn.

BP share price risks 

As the situation remains fluid, it is impossible for me or other analysts to place an actual figure on the cost the corporation will incur exiting this holding. Nevertheless, it is clear that the company’s decision will have a negative impact on its financial position. 

Still, while BP may have to take a financial hit from this development, rising oil prices might offset some of the impact. The price of oil has exploded higher in the past few days. It has charged back above $100 a barrel and could continue to rise further. 

This is terrible news for consumers, but BP’s profits will benefit as one of the world’s largest private oil companies. 

As I noted above, as the situation remains fluid, I think it is impossible to say how BP will benefit from higher oil prices. Disruption from the situation in Eastern Europe could far outweigh any benefits to the company’s bottom line. On the other hand, the enterprise could generate windfall profits. 

In either of these situations, I think some of the key points I made in my last article remain relevant. Most importantly, the company’s heavy investments in renewable and green technologies are going to be significant value drivers for the enterprise over the next decade or so.

Whatever happens over the next few weeks, the corporation should be able to maintain or even increase its renewable investments. 

Green energy focus 

I think this quality will push the BP share price higher in the long term. Investors have been concerned about how the company will deal with the renewable energy transition long before the current geopolitical crisis. I think this factor will continue to dictate the direction of the business over the next five to 10 years. 

As such, it is clear that the BP share price could place plenty of challenges and opportunities from the current geopolitical crisis. However, when focusing on growth in the renewable energy space over the next few decades, I think the company’s future is bright. 

With this being the case, I would be happy to continue to buy the stock for my portfolio today. I am focusing on its potential over the next 10 years, not 10 months. And over the next decade, the company’s fortunes look set to improve. 

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.

March sees the arrival of spring, hopefully bringing better weather with it. But one point that I need to be aware of as an investor is several meetings of the Bank of England Monetary Policy Committee. Some banks are forecasting the interest rate will be increased again this spring. Yet with another hike potentially taking the base rate to only 0.75%, I still think I can find better places for my cash than a savings account. One idea is investing in top dividend stocks.

Understanding dividend yields

Top dividend stocks aren’t necessarily just those that have the highest dividend yields. For example, Polymetal International has a yield of over 28% currently, with Evraz at a staggering 74%! The reason these yields are so high is because the share prices are falling. Even though the dividend per share hasn’t changed yet, it could be risky to buy these stocks at the moment. Issues relating to their exposure to Russia and Eastern Europe are concerning investors. If this impacts business, then the dividends per share might be reduced in coming months.

I have to remember that just because a yield is high, doesn’t always mean that it’s a safe option for me. 

Oil shares in focus

From that angle, I think an area that looks attractive is oil and gas stocks. These companies are benefiting from higher prices in key commodities. This isn’t just over the past week, when Brent Crude hitting $100 per bbl caught a lot of headlines. Rather, oil has been pushing higher for the past six months. Gas prices have also been rallying.

As a result, companies such as Shell and BP could see profits increase over the course of the coming year. Their current dividend yields are 3.5% and 4.5%, respectively. Higher prices should help to increase the dividend payouts. Not only this, but excess retained earnings should be used to pay down debt levels, improve cash flow and other positive points. In turn, this helps to support a more efficient business doing even better in 2023 and beyond.

The risk here is if I believe that commodity prices are overinflated. After all, it was less than two years ago that the oil price actually went negative briefly during April 2020. I’m not saying this is likely to happen any time soon, but it shows that it can be volatile and unpredictable. This can make dividend stocks tied to oil very high risk.

More top dividend stocks

Another area I like at the moment is insurance. Providers including Aviva and Legal & General (both yielding above 5%), I think, are well placed to take advantage of life getting back to normal. For example, consider car insurance from Aviva. More people are likely to be back on the road this year versus the lockdown-hit 2020 and 2021 periods. This should help to give rise to more policies being taken out.

I think the same applies for pension products, with people more comfortable with increasing payments to a pension now the future perhaps looks a little more certain.

In terms of risk, indirectly these dividend stocks are tied in some way to the fate of the stock market via pension funds. So a volatile market (as we’re seeing at the moment), could hamper performance.

Jon Smith and The Motley Fool UK have 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.

The share price of Russian gold miner Polymetal International (LSE: POLY) has now fallen by around 75% since Russia invaded Ukraine on 24 February.

This tragic situation remains a much greater concern than any share price movements. However, investors holding this FTSE 100 stock will understandably be worried about their shareholdings. Polymetal (and fellow Russian firm Evraz) are expected to lose their FTSE 100 places at the end of March. But will  Polymetal’s share price ever recover from this slump?

2021 dividend confirmed

Polymetal International’s 2021 results were released today. They’ve provided some extra information on this complex and uncertain situation.

First of all, the company has confirmed that it will pay a final dividend for 2021. The final payout of $0.52 per share gives a total dividend for the year of $0.97 per share, down from $1.29 in 2020.

The 2021 dividend is below broker forecasts of around $1.20 per share. But it still leaves this stock with a trailing dividend yield of 26%, based on Polymetal’s recent share price of 275p.

Press reports have suggested the dividend cash was already transferred to the group’s Cyprus base before banking sanctions came into force. I’d guess that future dividends are more uncertain.

Profits already under pressure

Many of the big mining firms have reported record profits recently. Polymetal’s 2021 numbers don’t look quite so strong to me.

Revenue was roughly in line with forecasts, at $2,890m. But inflation pushed the gold miner’s all-in sustaining cash costs up by 18% to $1,030 per ounce, above management’s target range of $925-$975/oz.

As a result of these higher costs, net earnings of $904m were below broker forecasts of around $950m.

Looking ahead, Polymetal says it’s maintaining its gold production guidance of 1.7m ounces for 2022 but has withdrawn its guidance on costs. That means profit forecasts will be uncertain too.

Russia’s central bank has already said it will start buying gold from domestic producers. China may also remain a buyer. That should help to support the group’s ongoing operations. However, I expect international banking sanctions and the devaluation of the Russian rouble to have a big impact on Polymetal’s cost base. That could cause profits to tumble.

Polymetal share price: one big investor is buying

A lot of investors have been selling Polymetal shares — hence the share price collapse. But not all of them. US private equity giant Blackrock has doubled its stake in Polymetal from 5% to 10% this week, apparently betting on a recovery at some point.

The share price crash has certainly left the stock looking cheap. Based on broker forecasts for 2022 before today, the shares now trade on around two times forecast earnings. Even if I assume that profits will fall by 50% this year, my sums suggest Polymetal stock could still trade on a P/E of four, with a possible dividend yield of more than 10%.

I think it’s possible that Polymetal’s share price might make a partial recovery, over the long term. But one big worry for me is that the stock will be delisted in London before that happens — most likely shifting to the Moscow stock exchange. 

If that happened while I held Polymetal shares, I might be forced to sell them at any price. That’s another reason why this investment is far too risky for me. I won’t be buying.

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.

The last 12 months have seen the easyJet (LSE: EZJ) share price fall 38%. And it’s down over 20% in the past six months alone. Like many of its peers, the stock has been hit hard during the pandemic, with the firm’s operations being brought to a halt for a large chunk of the last two years.

However, recent times have provided the business with optimism. More countries are ditching their restrictions in return for normal procedures. As such, should I be buying easyJet stock at the current price? Let’s take a look.

Encouraging results

Well, the outlook for easyJet certainly seems to be improving. The firm’s latest results for the three months to 31 December 2021 showed that revenue for the quarter stood at £805m. When compared to the £165m recorded for the same period in 2020, it is clear easyJet has taken large strides since the worst of the pandemic. Further, while the company still reported a loss, it was nearly half (£213m) of the £423m seen last year. And if this loss continues to be cut, I’d imagine this will lead to a rise in the easyJet share price.

We can also expect to see higher passenger volume in 2022. And this will provide easyJet with hope for the months ahead. As I recently mentioned in an article where I stated how I would buy shares in easyJet competitor IAG, passenger volume is expected to reach 3.4bn in 2022. This is nearly twice as high as 2020. This rise in volume is due to the reopening of borders globally, as more countries have dropped restrictions to allow smoother travel.

As I also mentioned, easyJet may have an edge over competitors with its cheap flight deals. As eager passengers look to potentially fly out for budget holidays, the firm is in a prime position to capitalise on this. I think this part of the business could excel in the next few months. And the share price could rise as a result.

easyJet share price headwinds

There are a few risks I must account for, however.

Firstly, while we seem to be coming to the end of the pandemic, an emergence of a new strain could potentially place us straight back in it. Any sign of this would have negative connotations for the easyJet share price.

Secondly, the price of jet fuel may increase because of the Ukraine conflict. The fear of decreasing supply could have a negative impact on the company’s operation. Costs will likely rise in the coming months.

What I’m doing

Despite the risks associated with easyJet, I think the outlook is bright for the firm. While its latest results show the business is heading in the right direction, what we can expect to see in 2022 will only bolster these figures. I also think that as consumers look to jet off for the first time post-pandemic, cheap options such as easyJet will be in high demand (this certainly applies to me). As such, I would be willing to buy easyJet stock today.

Charlie Keough 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.