I purchased this about 5 months ago when I felt that it had become a true value stock. Since then, it has gone up 40%. This is about the largest return I've ever made in a 5 month period, and I'm starting to feel like it might be a bit greedy to hold out for more.
Plus, I'm wondering it the stock still qualifies as a value, or has it likely already finished the majority of its run up in price?
Just starting to show it's value, and I think BP will have an outstadning 2011. Remember, BP was a staple in pension funds and other retirement funds across the world. It's stability and high yield was very sought after. After the spill, these funds were forced to sell because of high risk and the cancellation of the divvy. Now, when they reinstate that divvy, I comepletely expect these funds to purchase more BP. The psyhological impact will be great, as risk will be taken off the table. BP will soon again be an institutional favorite.
If you held for five month's I'm assuming you aren't a short term trader. I think we might get some profit taking here and have a short pullback for a week or two.
BP has gapped up for 4 days out of the last five, we have gotten the FED bond buying stimulus along with the dollars fall and oil prices up. We also had the news of HAL possible complicity in spill. And the decent quarterly report.
That's a lot of good news in a very short period of time. I'm looking for less news over the next couple of weeks. I sold my position (calls) on Thursday afternoon and am hoping to buy back in at a couple of bucks less sometime over the next week or so.
You might one to consider a few November puts to protect your gains if you dont want to sell your stock/
I don't consider myself to be a short term investor - I typically buy something with a 1-3 year mindset, after I've looked at it and decided it is undervalued. However, I have sold a couple of purchases in the past within a year, after it went down still further, and I decided chances of recovery were low.
That said, if something goes up 40% or more, I start to get a little nervous. I usually only hold out for a 20% to 30% return before selling. However, BP seemed horrifically oversold/undervalued. Trouble is, I can't seem to find anything else that undervalued to replace it with at this point.
(1) the dividend - when, and how much? If current informed speculation of a 50% cut is right, then I'd think we're toppy right now, for the short term. You'll probably see better prices in a year or two though (IMHO, based on a finding of no gross negligence).
(2) takeover. If you think there's any merit in any rumor of any takeover by any entity, then hold on for a price 40% higher than now, again IMHO.
But no-one, even Bob Dudley, yet knows the answers to these questions.
With your 40% gain I would guess that you got in around 30 a share. So if BP restored the dividend at .42 a share you would have a yield of approximately 5.6% with a lot of ceiling above you. That sound pretty risk free for me. Now as the memories of the spill fade, they do until the next one and there is growth in the dividend lets say back to .60 a share that would be a yield of 8%. If it would ever get back to it prespill dividend of .84 a share. Wow a 11.2% yield. That was easy. Sell your original cost and let your free shares work for you. If you have other moves with the money. I myself would let all my shares sit. What is the downside with the stock at this point. Long term BP will only put the spill behind and get back to the cash machine they were.