2 growth stocks I’d buy and hold for 5 years

These two shares could deliver rising valuations over the long run.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The performance of the oil and gas industry has been challenging in recent years. A falling oil price has caused activity across the sector to decline, and this has meant that profitability in the industry has come under severe pressure. As such, oil and gas companies have generally seen their share prices fall.

However, with the oil price having risen significantly in recent months, the prospects for the industry appear to be relatively positive. Certainly, volatility may continue to be high, but there could be capital growth potential on offer. With that in mind, here are two stocks that could be worth buying today.

Improving outlook

Reporting on Monday was Rockhopper Exploration (LSE: RKH). The oil and gas company provided an update on its Greater Mediterranean portfolio, with it delivering improved production from Abu Sennan. Current production is 4,000 barrels of oil equivalent per day (boepd), with the company seeing continued strong realised pricing. It has been able to sell oil from the area at a small discount to Brent.

Looking ahead, the company is set to engage in an active exploration and development drilling programme across both of its licenses in Egypt. It is seeing an improvement in the payment situation in Egypt, with it having reduced receivables significantly. Its historic liabilities to Beach Energy are also now satisfied.

While Rockhopper Exploration continues to be a relatively speculative business which could offer volatile performance, its capital growth potential could be high. If the oil price continues to increase or at least remains close to current levels, then the company’s forecasts may improve. This could lead to impressive future returns for less risk-averse investors.

Return potential

Also offering the potential for improving share price growth over the long run is Soco International (LSE: SIA). The company has experienced a relatively challenging period, with its financial performance coming under severe pressure. The Vietnam-focused company has endured a number of challenges in recent years, with a lower oil price making its trading conditions even more difficult. However, under its current strategy it appears to have the potential to generate improving financial performance.

Encouragingly, the company appears to have a relatively strong balance sheet. This could provide it with a degree of stability in what remains a relatively uncertain industry. And with it having no debt at the present time, it may offer less risk than some of its sector peers.

As mentioned, a higher oil price would be likely to have a positive effect on the oil and gas industry. With Soco in the process of developing its asset base through continued investment, the prospects for the business appear to be relatively bright. As such, and while its share price performance could be relatively volatile, now could be a good time to buy it for the long run.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens has no position in any 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.

More on Investing Articles

Investing Articles

Warren Buffett just bought these 2 stocks!

Warren Buffett just invested $700m in these stocks! What’s the strategy behind them, and should investors think about following in…

Read more »

Investing Articles

£10 a day invested in UK stocks could create a second income of £40,000 a year!

Investing even a small amount of money regularly can generate a substantial second income stream in the long run. Zaven…

Read more »

Content white businesswoman being congratulated by colleagues at her retirement party
Investing Articles

Are these the best stocks to buy and hold in a SIPP?

The UK has 30 ‘Dividend Aristocrats’ to buy and earn rising passive income in a SIPP, but are they the…

Read more »

Investing Articles

These UK shares are close to record cheap levels

These two UK shares are trading below their average earnings multiples, creating a potentially explosive buying opportunity for patient investors…

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

My Stocks and Shares ISA has exploded in 2024. Here’s what I’m doing now

Zaven Boyrazian’s Stocks and Shares ISA is beating the FTSE 100 and S&P 500 in 2024. Here’s a look at…

Read more »

Investing Articles

Here’s the dividend forecast for Lloyds shares out to 2026

Predictions for dividend progress from Lloyds shares over the next few years look upbeat now. But the path might not…

Read more »

Middle-aged black male working at home desk
Investing Articles

1 of my favourite UK dividend shares this December!

Diageo's one of the best dividend growth shares in my Stocks and Shares ISA. At current prices I'm considering buying…

Read more »

Investing Articles

3 REITs I’d consider buying to target a long-term second income

I'm seeking ways to make a market-beating second income. These real estate investment trusts (REITs) could be just what I've…

Read more »