The Centrica (LSE: CNA) share price had a good run this past week, breaking past the 80p mark for the first time in four months after it released a somewhat upbeat trading update. This is very good news for the FTSE 100 share, which has been struggling for a while.
But I believe that it will take more than a single trading update to lift the share price meaningfully, especially after seeing how much it has fallen over the years. To put it in context, the CNA share price has lost over half its value from five years ago. It’s also at a fraction of the highs it has seen over the decade.
No capital gains here
The loss in value was one of my biggest concerns when I first wrote about CNA in May this year. For investors like me, who invest for capital gains, Centrica’s trend isn’t comforting at all. It is one of the reasons why I decided at the time that it was a better idea to hold off from investing in CNA and put it on my ‘wait and watch’ list instead.
Make no mistake, this latest spike in price is a movement in the right direction for the energy supplier. Nevertheless, the share price is a whole 13% lower than when I first talked about it.
Certainly, I wouldn’t buy Centrica shares right now, and I won’t until it has shown some consistent upward price movements. The key question is, to my mind, whether to even keep it on the ‘wait and watch’ list. To me, that depends on how it’s performing right now and how it’s expected to perform going forward.
Promise of better times
The latest trading update contains a few positives about the business, like “growth in total customer accounts, higher margins and…. acceleration of cost efficiency delivery”. It also reports that CNA is on track to achieve full-year targets. A case to made for the stock, if a good dividend yield makes you tick. For me, Centrica is still on my ‘wait and watch’ list.
But while we are waiting and watching, may I suggest some shares that are far more predictable in their share price trajectory? Unilever is one I like, because it has given huge capital gains in the past. It’s also a defensive share, being in the business of consumer staples. I have been focusing on this segment in the past days as macroeconomic uncertainty persists.
With its big presence across international markets, Brexit (or the more-likely Brexit limbo) isn’t about to rock its fortunes. Unilever’s share price has also fallen in November so far, making now a good time to invest in this high-quality share.