BP (LSE: BP) shares have been a stunning investment lately, rising 13.5% year to date and an impressive 50.18% over the past 12 months. That compares to increases of 4.25% and 9.27% respectively for the FTSE 100 as a whole.

This will surprise few people. The energy shock caused by Russia’s invasion of Ukraine has been felt in everybody’s pockets.

Yet the oil price has plunged since peaking at $121 a barrel in early June, with the Brent crude and West Texas Intermediate oil benchmarks now trading at just $81.63 and $74.65. That’s a drop of roughly a third. With wholesale natural gas prices also falling sharply, BP’s popularity isn’t just down to the energy price spike.

One explanation is that investors are no longer scared that BP could get caught short by the energy transition. If the last year has shown us anything, is that we still need fossil fuels. Our social and economic stability is based on their ready supply.

If BP and fellow FTSE 100 oil major Shell pull out of fossils too fast, dirtier producers from countries with weaker regulation will rush to plug the gap, and the planet will be the net loser.

BP’s recent results have undoubtedly impressed investors. It more than doubled annual profits to a record $27.6bn, and is treating shareholders to a $2.75bn share buyback, funded from Q4 surplus cash flows of $5.1bn.

The longstanding concern about buying shares in BP is that the company is at the mercy of the oil price, over which it has no control. I remember how its stock collapsed below 200p during pandemic lockdowns, when oil briefly touched $20 a barrel. Today it’s at 549p.

Yet the oil price would have to crash by half to trouble BP, as its break-even point is now a lowly £40 a barrel, thanks to frantic cost cutting during the last downturn. With the oil price expected to range between $90 and $100 a barrel this year, the good times should continue to roll in 2023. Especially as the Chinese economy reopens after Covid lockdowns.

The BP yield is disappointing compared to the days when 5% or 6% was routine. Today, it yields 3.7%, but it’s on the way back, with management increasing its ordinary dividend by 10%. Next year, BP’s yield is forecast to hit 4.6%, covered a meaty 4.1 by earnings. It’s rare to see major FTSE 100 stocks with that much cover (although Barclays has been running it close).

BP’s net debt has now been cut for the 11th successive quarter to $21.4bn, nibbling away at another longstanding investor concern. The threat from UK windfall taxes appears to be overdone, too. The North Sea accounts for less than 10% of BP’s global profits. The UK’s energy profits levy will cost the group £700m, but that’s a fraction of its $15bn global tax bill.

I have just one major concern today. I can’t afford to buy every FTSE 100 stock that I take a shine to, and one filter I apply is to buy them when their shares are down rather than up. On that basis alone, I won’t buy high-flier BP in March. BT Group and Unilever both offer superior recovery possibilities, in my view, and I’ll prioritise those two laggards instead.

The post BP shares are up 13.5% in 2023! Should I buy them in March? appeared first on The Motley Fool UK.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Unilever Plc. 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.