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.
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.