Fear is causing FTSE 100 shares to flash red. But why are these two companies winning?

Shares on FTSE100 on October 2 were mostly red amid the tragic escalation of tensions in the Middle East.

JD Sports AND Severn Trent were among the most affected and fell by 5% and 3.5% respectively. But not every price has dropped. The two companies that ended the session in positive territory yesterday were insurance giants Prudential (LSE: PRU) and oil giant BP (LSE:BP).

Let’s look at what helps generate these outliers.

BP

When news of the impending escalation first broke, the price of Brent crude oil increased by 5%. About 31% of the world’s oil comes from the region, so any threat to supplies causes prices to rise. This is a common and unfortunate side effect of conflict in the area.

Naturally, this translated into the share prices of the largest oil companies, such as BP i Shell. But for BP shareholders, this is little change in the long run. This increase did little more than make up for the losses from the end of September – the price is still down 13% since the beginning of the year.

Whether the price will rise in the long term depends on how well it balances the transition to sustainable energy. Pursuing green energy goals while maintaining profitability is proving to be a challenge for BP.

Is this a purchase for me?

With a forward price-to-earnings (P/E) ratio of 4.37, it seems sufficiently undervalued to me. Shell is slightly worse, with a forward P/E of 8.5. Supply issues aside, the cyclical nature of oil means the industry could be positioned for growth in 2025.

Until then, the dividend yield of 5.65% makes the stock more attractive. It has been a solid dividend payer for years and shows no signs of weakening. It currently pays 23p per share and is forecast to rise to 26p by 2026.

However, the demands of the energy transition combined with the ongoing conflict make BP’s future unpredictable. Therefore, I do not intend to buy any more shares today. But I’m happy to keep the ones I have.

Prudential

In late August, Prudential released its first-half results, which showed an 8% increase in new business and a 9% increase in adjusted operating profit. It increased its interim dividend to 6.8 cents per share and bought an additional 22 million shares as part of a $2 billion share repurchase program. It also announced a strategic partnership with Bank Syariah Indonesiaaiming to strengthen its presence in the growing Islamic insurance market.

But not everything was positive. Revenues and profit margins fell by 1.7% and 17% respectively, resulting in an 80% decline in profit after tax. The stock fell 6.8% in the week after the announcement, but has since fully recovered and is up 18%. However, it still faces significant risks from macroeconomic uncertainties in Asia, particularly its large customer base in Hong Kong. Price increases in some Asian markets have also proven unpopular and could threaten earnings.

On the list

Looking at fundamentals, Prudential is down 57% based on cash flow estimates and has a respectable forward P/E of 11.6. Since the beginning of September, the share price has already increased by almost 20% and I expect this to continue.

Profits are forecast to reach £2.76 billion by 2026, with analysts on average expecting a 58% price increase over the next 12 months. I talked about buying shares a month ago and now I regret that I waited. So they are definitely on my list for the next round of shopping.