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As a rule I look out for updates from the stocks I have bought. But in February, I am particularly looking forward to them. Some FTSE 100 stocks I either own now or have owned in the past have run up a lot in price recently. Their upcoming updates will show me whether these increases are justified or whether they are not. 

Is this FTSE 100 stock’s high P/E justified?

The first of these is the Swiss commodity miner and marketer Glencore (LSE: GLEN). The stock has done exceptionally well in the past year. Even while other FTSE 100 miners fumbled as the commodity price rally slowed down, it has risen fast. In fact, now its market valuation is way ahead of that for all its peers. At a price-to-earnings (P/E) of 35 times, it is also significantly higher than that for the FTSE 100 index as a whole, which is 18 times. 

I held the stock till very recently in my investment portfolio, but going by its small dividends (it has a dividend yield of only 1.4% right now) and its current overvaluation, I was not convinced if there is much more upside to it. So I sold it at a pretty decent profit. And so far, its stock price has not seen any sustainable gains since.

Glencore could increase dividends

But there are two reasons why I believe now that there could indeed be a lot more upside to the stock. One, its 2021 results release later this month, will reveal how it has performed. And if it has seen a significant rise in earnings, then its share price might just be justified. 

And second, I want to see if it increases its dividends. As per recent AJ Bell research, the company is expected to grow its dividends the most in 2022 from among FTSE 100 stocks. This is in stark contrast with the fact that all the other FTSE 100 miners, which are Anglo American, Evraz, and Rio Tinto, are expected to decrease their dividend amounts this year. If both earnings and dividends grow now for Glencore, I would seriously think about buying the stock again. 

Can the BT stock continue to gain?

The next FTSE 100 stock whose update I await is the telecom biggie BT. I have held the stock in my portfolio to limited gains. I do not blame the company of course, these two years have been the most atypical I have seen in my many years of investing. My reason for buying the stock was its dividends, and despite its share price weakness. 

It stopped paying dividends in the pandemic, but has now resumed them and its share price has also started strengthening now, which is heartening to me as an investor. I am looking forward to its update due later this week to figure out whether the stock can get even more robust now. My decision to stay invested in it could depend on that. 

Manika Premsingh owns BT GROUP PLC ORD 5P. 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 past 27 months have been a wild roller-coaster ride for Scottish Mortgage Investment Trust (LSE: SMT) shareholders. Since 2019, the SMT share price has soared skywards, delivering market-busting returns. But after a sparkling 2020, SMT had a poor 2021, plus the shares have plunged in 2022. So is this former star stock now a dog, or will it rebound?

The SMT share price soars

Scottish Mortgage is an investment trust with shares listed in London. However, Baillie Gifford’s leading global technology fund doesn’t invest in mortgages or Scotland. Launched in 1909, SMT has two accomplished co-managers, James Anderson (manager/joint manager since 2000) and Tom Slater (joint manager since 2015).

Anderson and Slater invest in high-growth businesses and disruptive companies driven by technology and innovation. They aim for a holding period of at least five years. As a result, SMT’s top 10 holdings include various dynamic growth companies. The trust has annual charges totalling 0.34% and trades at a discount of 1.8% to its net asset value (NAV). SMT has total assets of £20.7bn, making it a UK fund heavyweight.

Thanks to the powerful out-performance of tech stocks, the SMT share price has exploded since 2019. On 23 October 2019, the SMT share price closed at 472p. It then took off on an almost relentless climb. At the end of 2019, it closed at 579p, up 107p (+22.7%) in just over two months. 2020 was an incredible year for SMT, as its share price went ‘to the moon’. By end-2020, SMT shares closed at 1,214p, up 742p in 12 months. That’s a market-thumping return (excluding dividends) of 157.2% in one year. Wow.

SMT slumps, soars, and slumps again

In early 2021, the SMT share price continued its seemingly inexorable rise. It peaked at an intra-day high of 1,418.57p on 16 February 2021, before easing back to close at 1,401p. On 15 January 2021, I warned that SMT had “become a market bubble because of the number of ultra-frothy stocks lurking within it.” I also wrote, “I expect it [SMT] to be a poor performer in the coming years.” Within weeks, the shares slumped dramatically. On 5 March 2021, they crashed to a closing low of 1,017p. They then slumped to an intra-day low of 947.25p on 8 March, before recovering to close at 1,056p.

However, the SMT share price then blew one more bubble. It surged again, peaking at an all-time high of 1,568.5p on 5 November 2021, before closing at 1,528.5p. Unfortunately, since Bonfire Night, SMT shares have gone up in smoke. As I write, they trade at 1,073.8p, down 494.7p (-31.5%) from their record high. After this latest nosedive, here’s how this stock has performed over five time periods:

Five days: +3.5%
One month/YTD: -17.1%
Six months: -19.5%
One year: -16.3%
Five years: +211.9%

Would I buy SMT today?

While SMT’s share price has been a star performer since 2016, it has under-performed and been highly volatile in 2021-22. Investors selling at November’s peak avoided a three-month price decline of nearly a third. On Friday, SMT stock hit its 2022 low of 992.96p, before closing at 1,028p.

Would I buy into SMT at current levels? As an income-seeking value investor, I am hardly a natural buyer of go-go growth stocks. Furthermore, I feel that the bursting of 2020-21’s bubble is unfinished. Hence, I would not buy at the current SMT share price. Indeed, this stock would have to go much lower before appearing on my buy watchlist. But, of course, I could well be wrong!

Cliffdarcy 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.

Dividend payments can help me make a passive income from my holdings. With this in mind, I am on the lookout for dividend stocks. One under-rated pick I currently like for my holdings is Segro (LSE:SGRO). Here’s why.

Property boom

Segro is a UK real estate investment trust (REIT) that is one of the largest warehousing and industrial property players in the UK. REITs are designed to return a good chunk of profits back to investors as dividends. These dividends help potential investors like me make a passive income.

As I write, Segro shares are trading for 1,309p. At this time last year, the shares were trading for 973p, which is a 34% return over a 12-month period.

Risks of investing

The obvious risk with any dividend stock is that dividends can be cancelled at any time. This could be due to poor performance or market issues as well as a number of other factors. Dividends are not guaranteed.

Segro’s focus on warehousing space is one of the main reasons I like it. This is due to the burgeoning demand for industrial and warehousing space.

There are many more firms attempting to capitalise on this lucrative market and lots of money is being pumped into industrial and warehousing property in the UK. The risk with any market that could be oversupplied is that performance and returns, of a firm like Segro, could be hurt and affected. This could mean shareholder returns could be affected, and thus, any passive income I hope to make.

Under the radar passive income option

There are many dividend stocks out there that boast an enticing dividend yield. But sometimes, a high yield can be deceiving, and it can be an indicator of a company in trouble. Instead, I like to look at a stock’s fundamentals when looking for passive income options. In regards to Segro, I can see it has a yield of just below 2%. But, it has a good record of dividend payments and growth year on year. Between 2016 to 2020, the dividend has increased from 13p per share, to 20p. I do understand that past performance is not a guarantee of the future, however.

Is Segro currently performing well enough for me to believe dividend payments will continue in the future? Well, a Q3 update released in October made for good reading. It reported that rent was up compared to the same period last year. As were pre-let rent agreements. Vacancy rates had also dropped and customer retention was up.

The main reason I like Segro is the growth market it is operating in. The e-commerce explosion, especially since the pandemic, has seen the demand for warehousing and industrial property outstrip supply. Segro is one of the biggest operators in this market and can capitalise on this growth sector. This should help boost performance and any passive income I hope to make.

Overall, I think Segro could be a good addition to my portfolio. It is a leading player in a burgeoning growth market. Furthermore, at current levels, the shares look cheap with a price to earnings ratio of just 6. A dividend yield of less than 2%, operating in a boring but lucrative market and its cheap price lead me to class it as under the radar. I would add the shares to my holdings now to help me make a passive income.

Jabran Khan 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 year 2021 was a good one for FTSE 100 dividends. Almost across the board, we saw an increase in payouts. This year might be equally good, if not better, as the recovery strengthens. But I do believe it would be a mistake to think that the stocks that earned me solid passive income last year will be the ones to do so this year as well. Considering the mining group, for instance. The set has had some of the highest dividend yields in the past year, but with a cooling off in metal prices, their dividends are set to fall. Similarly, real estate stocks might slow down as well. But there are still some FTSE 100 stocks that could do quite well. Here are five such.

#1. Glencore: FTSE 100 mining outperformer

Ironically, the stock expected to increase its dividends the most this year is also a miner, Glencore, as per AJ Bell research. In fact the increase in the dividend amount is expected to be more than two times that of the next biggest. I actually held the stock till recently, but sold it because I believe it was overvalued and its dividends so far at least were nothing great. If it does increase it dividends now, who knows, I might just be willing to give it another go. 

#2. Royal Dutch Shell: oil price bonanza

The FTSE 100 oil biggie Royal Dutch Shell is expected to post the next biggest increase this year. No points for guessing why. Oil companies are expected to see a big bonanza on account of high oil prices, as demand stays elevated while the recovery ensues. We have already seen an upturn in oil companies’ financial fortunes in the past year and there could be more in store. BP’s dividends are also expected to rise, but the company is not on the list of the biggest five dividend increasing stocks this year. I own both stocks, and am planning to load up more on them. That is only in so far as growth does continue, though. With super-high inflation, who knows what happens next?

#3 & #4. HSBC and Lloyds Bank: interest rate hikes

The two banking stocks, HSBC and Lloyds Bank are number three and four on the list. Banking stocks’ dividends have been withheld recently because of regulatory requirements and possibly even a weak recovery. However with interest rates expected to rise significantly over the course of 2022, banks could see an increase in margins. This in turn could increase their dividends to pre-pandemic levels. Both stocks are on my buy-list for this year. 

#5. Flutter Entertainment: starting out on dividends

Next, is the FTSE 100 sports betting and gaming company Flutter Entertainment. It does not pay a dividend at present, but clearly it intends to now. The stock did quite well in the months immediately following the first lockdown, but its share price has subsided since. In fact, it has lost ground over the past year. Even earlier, I was not keen on it from an ethical standpoint. And considering that it will just start paying dividends, I doubt if its yields would be particularly noteworthy. I will continue to avoid it. 

Manika Premsingh owns BP and Royal Dutch Shell B. The Motley Fool UK has recommended HSBC Holdings and Lloyds Banking Group. 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 FTSE 100 touched 7,600 this month, a first since the Covid-19 crisis happened. Growth prospects for the UK look good, as do dividend forecasts. So why am I talking about a stock market crash here?

That is because as an investor I like to be prepared for every possible outcome. There is no denying that things could go really well. But it is also true that they could go south in a heartbeat. I mean, just think back to two years ago. At this time in 2020, we had absolutely no clue what was going to hit us. If we had any inkling, perhaps we could have been better prepared. Or even better, we could have made the most of the stock market crash that ensued. 

Covid-19 returns

And right now, there are still a number of risks on the horizon. Including that of a potential resurgence of the pandemic. There is no denying that we have come a very long way from two years ago. But the emergence of new variants leaves me wondering if we are indeed at the end of this tunnel or not. In fact, even if the threat itself is not big, it could well have a sentimental impact on the stock markets. We saw that when the Omicron variant was discovered in late November last year. The wobble to the markets did last for a few weeks. Who is to say that we might not have a full-blown crash again if another variant is discovered?

High inflation could stay

Also, inflation is pretty damn worrisome. Just this morning I woke up to a Financial Times article that quotes Nicolai Tangen, the CEO of the world’s largest sovereign wealth fund, who has a grim view on inflation. He says that returns to stock markets could be impacted for the next few years because of high price increases. And indeed, inflation numbers are already quite high. In the UK, we have seen two months of 5%+ inflation and it is expected to stay in the foreseeable future too. While there are still some economists who believe that high inflation is transitory, I think we should not take it for granted. Especially not at a time when there is speculation that the oil price could rise to $150 a barrel. 

Higher interest rates could be bad news

High inflation has accelerated the start of an interest rate hike cycle already. While this is good for the likes of banking stocks right now, the core purpose of any rate hike is to slow down demand, which cannot be good for FTSE-listed companies in the short term. This is particularly so right now, when many companies have taken on a whole lot of debt during the pandemic. 

What I’d do in a stock market crash

The important question though, is this. What needs to be done if there is indeed a stock market crash? The purpose of this article is not to create panic, but to illustrate that a crash might be coming. Like the previous one it is also an opportunity to invest, not to run for the hills. That is what I am doing now. 

Manika Premsingh 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.

If I were to start my stock market investing journey today, I think now would be a great time for me to start buying FTSE 100 stocks. There is no denying that there are risks on the horizon, even increasing risks. But it is also true that the opportunities are huge. And they are even growing in some sectors. 

FTSE 100 index is robust

First consider the performance of the FTSE 100 index so far in 2022. The index is up by only around 1% in January, but the overall number hides an important development. The index finally touched 7,500 this month, and even closed above that level for more than one session. At one time it even reached 7,600+ levels. I think this could bode very well for the future as well. 

Growth opportunities in the UK

Component companies of the index have been reporting good updates, and the prospects for the UK economy look good too, which also bodes well. The International Monetary Fund just updated its growth forecasts for 2022, which put the UK’s growth among the highest across Europe’s developed economies. In a recent survey, the investment bank Goldman Sachs also found that its clients expect European stock markets’ growth to outstrip that of the US. So clearly the winds are blowing in favour of our economy.

Also, the latest numbers from the UK look robust. The UK economy is finally back to its pre-pandemic levels. It might have taken a while, but clearly it is on the right path. And this, in particular, could be a big positive for UK market-centred stocks. Many of these can be found in the FTSE 250 index, while the FTSE 100 index has a far more globalised variety of stocks. Even then, I can find UK specific stocks like Lloyds Bank and Natwest, that could really gain from the ongoing recovery. 

Dividend yields to strengthen

And banking is just one sector where the growth opportunity just got bigger. The others include oil stocks, green energy related ones, and even the still beaten-down recovery stocks in industries like travel and tourism. Because their growth now holds promise, I reckon that they could increase their dividends as well. I am particularly hopeful for oil stocks, which could see quite the windfall as oil prices keep rising. According to AJ Bell research, the dividend yield for the FTSE 100 as a whole is expected to be 4.1% in 2022, up from 3.4% right now. And stocks like Royal Dutch Shell and BP are indeed expected to grow their dividends, even while last year’s dividend stars like the industrial metal miners are expected to reduce theirs. 

The inflation worry

Both dividends and growth could however be hurt if inflation continues to rise. The UK has seen two months of 5%+ annual inflation, and as per forecasts, it could stay elevated in the near future as well. Many FTSE 100 companies have flagged it as a risk in their updates. I am watching out for this aspect when buying stocks now. But all things considered, I reckon that this is a really good time for me to invest £10,000 in the stock markets. 

Manika Premsingh owns BP and Royal Dutch Shell B. 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.

Key points

• Tesco has an excellent growth record
• The company recently increased its profit guidance
• A crowded retail sector might impact the share price
  

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Mainly known as a food retailer, Tesco (LSE: TSCO) is among the most recognisable brands in the UK. Its segments span food and fuel retail to banking, and it operates in the UK, Ireland, and much of Central Europe. The company has performed particularly well during the Covid-19 pandemic and the Tesco share price is up 30% since March 2020. So should I be adding this stock to my portfolio? Let’s take a closer look.

Appealing fundamentals

A fundamental analysis of Tesco reveals a very strong track record. This is demonstrated in terms of earnings per share (EPS), revenue, and profit before tax. The company has particularly strong earnings data. Over the past five years ended 27 February, I have calculated that the Tesco EPS shows an average annual growth rate of 12.3%. As a potential shareholder, this is extremely attractive.

This earnings record contrasts with competitors, like J Sainsbury. While Tesco has seen its earnings grow, J Sainsbury’s have been consistently declining. For me, this is simply another reason to view the Tesco share price as an attractive current prospect within its market sector.

With a price-to-earnings ratio (P/E) of 19.9, this is slightly above the industry average of 19. While this does not imply that Tesco is wildly undervalued, it is also not terribly expensive.     

What’s more, the company is profitable. In the last fiscal year, Tesco posted profits before tax of £825m. This is up from £145m five years ago. It is heartening to see that this stock has continued to post profits during the turmoil of the pandemic. This is another reason I’m thinking of buying Tesco.

Recent factors impacting the Tesco share price

Good news continued in a recent trading update for the 19 weeks to 8 January 2022. In another display of solid growth, group retail sales increased 2.6% on a year-on-year basis. Furthermore, in advance of its annual results, Tesco raised profit guidance in the retail segment to £2.6bn and in banking to £160m-£200m. I will be looking very closely when the annual results are published in the near future.

The news is not universally positive, however. The retail sector is becoming increasingly crowded and competitive. Only in October 2021, Morrisons was bought by a US private equity firm for £7bn. Furthermore, there is an ongoing price battle with more affordable stores, like Aldi. This competition could ultimately have a negative impact on the Tesco share price.

On the flipside, the company appears to have navigated the pandemic-induced supply chain issues rather well. The research group Kantar recently stated, “Shoppers clearly trusted that supermarket shelves would remain well stocked”. This is testament to Tesco’s smooth operations, unlike other supermarkets like Lidl.  

With solid fundamentals and positive forward-looking guidance, I’m excited by this stock. Although there is increased competition, I think the company can embrace it and this will hopefully have a positive influence on the Tesco share price. I will be purchasing shares without delay.  

Andrew Woods 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.

High interest rates are a good thing for retail banks like Lloyds Banking Group (LSE: LLOY). The higher the benchmark, the larger the margin between what banks can offer to savers and to lenders. This can have a huge impact on bank profits.

The Bank of England kept its core rate locked around record lows in the 10-plus years following the financial crisis. Profits at the likes of Lloyds suffered as a result and the share prices of these financial leviathans dragged. The Lloyds share price actually rose a disappointing 12% between 2010 and 2020. Compare that to the roughly 40% rise the broader FTSE 100 recorded.

The Lloyds share price rises on rate expectations

Could things finally be about to turn conclusively for the Lloyds share price, though? Over the past year, the bank has risen 53% as expectations of sustained interest rate rises have grown. In December, the Bank of England hiked its benchmark for the first time since autumn 2017, from all-time lows of 0.25%. The smart money is on another increase at the next meeting on Thursday, 3 February too.

Market commentators predicted rate rises because of the UK’s strong economic rebound from Covid-hit 2020. Supercharged inflation gauges more recently have amplified the pressure on the central bank to act, too (consumer price inflation just hit 30-year highs of 5.4%).

Will inflation keep soaring?

Even if the Bank of England acts this month, though, it’s possible that the inflationary pressure will continue to grow. Energy prices are soaring and the issue could get worse if Russia invades Ukraine. The impact of post-Brexit trade regulations on existing supply chain problems could also send prices higher.

Finally, a rise in the UK national living wage to £9.50 from April threatens to fuel inflation further still. Chairman of the Treasury Committee and Conservative MP Mel Stride recently commented that “focusing on increasing wages without improving productivity is likely to be inflationary, and risks contributing to a wage-price spiral”.

Why I’d buy other FTSE 100 shares

It’d be a stretch to imagine that the Bank of England, to the benefit of Lloyds and the other banks, will continue raising rates to match the inflationary surge, however. At some point policy makers will have to halt hiking the benchmark so as not to choke off the (already flagging) economic recovery.

It’s my opinion that the risks to the economic rebound are rising. This is reflected in economists cutting their GDP growth predictions for 2022. And it’s the main reason why I’m not tempted to invest in highly-cyclical shares like Lloyds. Corporate insolvency rates are already rising sharply, and the pressure on individual and household budgets looks set to rise further once larger National Insurance contributions come into effect in the spring.

City analysts think Lloyds’ annual earnings will drop 23% in 2022. I think the chances of a more painful decline are growing, however, as are the prospects of bad loans surging and sustained pressure on revenues. And I worry that these problems could drag beyond the current year too. I’d rather buy other FTSE 100 shares today.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. 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.

As the coronavirus went global in early 2020, the world economy collapsed. Due to social restrictions and lockdowns, energy usage slumped and the oil price crashed. On 1 January 2020, a barrel of Brent Crude oil cost around $66. During the Covid-19 crisis, this collapsed below $16 in April 2020. Crikey. But oil came gushing back in 2021-22, with oil shares following suit. So should I buy BP (LSE: BP) shares or Shell (LSE: SHEL) stock now?

Gushing oil drives BP shares and Shell stock higher

At its 52-week low on 22 January 2021, Brent Crude hit $54.48. On 1 December 2021, it traded at $68.87, but then gushed even higher. As I write, Brent Crude is $91.07 a barrel. That’s a surge of almost a third (+32.2%) in two months. Also, it’s over two-thirds (+67.2%) higher than 2021’s low. As a result, BP and Shell stock have soared.

At their 52-week low, BP shares hit 250.35p on 2 February 2021. As I write, they trade at 387.55p. That’s a gain of 137.2p (+35.4%) in 12 months. Meanwhile, Shell stock hit a 52-week low of 1,289.4p on 3 February 2021. Today, it is 1,895.2p, up 605.8p and a return of nearly half (+47%) in one year. Like BP shares, Shell stock has been buoyed by rising oil prices. But what if oil keeps climbing?

BP versus Shell: which would I buy?

For environmental, social and governance (ESG) investors, investing in fossil-fuel companies is problematic. But oil and gas will remain crucial to the global energy supply for several decades. Also, supply issues mean that oil might go even higher, despite being at seven-year highs. Brent Crude last exceeded $100 a barrel in October 2014. It also exploded to a record peak above $147 in July 2008. And when the oil price climbs, it boosts oil producers’ cash flow, profits, and earnings. Thus, while high oil prices fuel inflation (the rising cost of living), they also boost the prices of BP and Shell shares.

I don’t own BP or Shell shares today, but I may add BP and/or Shell to my family portfolio. They could act as a hedge against higher UK energy prices, which are already rocketing. Here’s a comparison of the two stocks:

First off, Shell is almost twice as large as BP. However, its shares trade on a higher price-to-earnings ratio and lower earnings yield. Also, BP’s cash dividend yield is 0.9 percentage points higher than Shell’s. Meanwhile, the FTSE 100 index also offers a dividend yield of 4% a year. On fundamentals at least, BP shares look cheaper than Shell’s. However, Shell made some major write-downs in 2021, which will temporarily affect its fundamentals. Also, these are backward-looking figures, so both companies’ fundamentals should improve in coming quarters.

Furthermore, if the oil price hits $100+ and stays elevated, then BP and Shell should make out like bandits. In time, this might trigger larger share buybacks and higher cash dividends for shareholders. On the other hand, if a new virulent virus variant emerges, then all bets would be off. Indeed, it’s possible that the oil price could collapse again, dragging down both BP and Shell.

Nevertheless, I like the look of both, so I’d be a buyer of both today. However, I would favour BP over Shell on value. And I expect both companies will have a better 2022 than 2020-21!

Cliffdarcy 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.