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3 Shares With Potential for a Fast 20% Rise: BP plc (BP), Royal Bank of Scotland Group plc (RBS)

LONDON — Even in a year when the FTSE 100 has already advanced 9.2%, some blue-chip shares have room to move higher still.

Here are three shares that could deliver big returns in the short term.

1. BP plc (LON:BP)

If BP plc (LON:BP) shares were to rise 20% from here, the company’s share price would be 540 pence. Since the Gulf of Mexico disaster, the highest that the shares have traded is 500 pence.

BP plc (LON:BP) shares currently trade on a 2013 P/E of just 8.1 times forecasts. The company is expected to pay dividends that add up to a 5.4% yield for this year.

BP plc (ADR) (NYSE:BP)The stock is currently being held back by worries over an ongoing court case relating to the Gulf of Mexico disaster. If the result is anything other than a huge fine for BP, expect the shares to rise immediately.

BP plc (LON:BP)’s new deal with Rosneft could also transform investor perceptions.

2. Royal Bank of Scotland Group plc (LON:RBS)

In January this year, shares of Royal Bank of Scotland Group plc (LON:RBS) were changing hands for 370 pence. That’s 18% ahead of where we are today.

Sentiment toward the banks has been battered by Payment Protection Insurance miselling, LIBOR fixing and interest rate swap miselling. Due to a collection of (hopefully) one-offs and technical accounting reasons, RBS was forced to report a huge loss for 2012.

This has shrouded the bank’s recovery. By a number of measures, Royal Bank of Scotland Group plc (LON:RBS) is fast-improving. As so few commentators are mentioning the good news from RBS, this feels like a point from which sentiment can only improve.

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