If I’d invested £1,000 in Shell shares 1 year ago, here’s what I’d have now!

Since the height of the pandemic, shell (LSE:SHEL) shares have provided shareholders with exceptional returns. The big question for many investors is, how long can this growth continue?

So let’s take a look at Shell stock and explore what’s next for the oil & gas giant.

more growth

Despite the recent share price volatility caused by fluctuating oil prices, Shell shares are up 12% over 12 months. So if I invested £1,000 in a company a year ago, today I have £1,120. That’s not bad at all.

Plus, I’ll get dividends during that time. The dividend yield is now 3.5%, but a year ago it was closer to 4%. My £1,000 will generate around £40 in return.

So the total return on my investment is about 16% – about double the average investor can expect from FTSE 100.

Performance remains strong

In an update on Thursday ahead of May’s Q1 results, Shell said it would report higher liquefied natural gas (LNG) output (7-7.4m tonnes) per quarter. It follows an outage at an Australian plant last year as well as stable income from LNG trading.

There are positive suggestions elsewhere. The company said its oil products division will increase earnings through “Significantly more“trade performance. Renewables is expected to contribute $ 100m-$ 700m in adjusted earnings, compared to $ 300m in the last quarter of 2022. That some of the corners and leaves a lot of uncertainty. But at the upper end of the range, it may be very positive

Investing in volatile markets

Shell can be a volatile stock to invest in. Often this has nothing to do with operational performance but economic data, geopolitics, OPEC+ comments, and, as a result of the above, changes in oil prices.

This volatility, and the often cyclical nature of energy markets, is why oil companies are not trading at high valuations. Shell trades for around 7.5 times earnings. That’s just above half the index average.

However, as noted, there may be good reasons for this. Shell’s performance is heavily influenced by the prices it can achieve for the oil, gas, energy and petroleum products it produces. When the price of natural gas and oil goes up or down, we see almost immediate changes in stock prices.

After the new OPEC+ cut, some analysts started talking about oil exceeding $100 per barrel in the near future. But some big banks have cut their price forecasts on slower economic growth around the world, and even a recession in the US.

Personally, my preference is to try and avoid more volatility than necessary. I’m pretty bullish on the long-term outlook for hydrocarbons, but I wouldn’t buy hydrocarbon stocks right now because oil seems so volatile right now.

All it takes is some negative US economic data to lower energy prices. So, I think there might be a better entry point at the end of the year if I stick with my thesis on long-term strength in hydrocarbons.