5 stocks to watch in August

Important information - the value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

Fresnillo is expected to publish its interim results on 5 August.

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BP

Energy major BP will also publish its interim results on 5 August. Unlike Fresnillo, however, it is struggling to drum up much market enthusiasm.

A bit of backstory is necessary here. Under former chief executive Bernard Looney, BP invested heavily in green energy at the expense of its oil and gas business. From a commercial perspective, this has not paid off: BP’s share price has lagged that of Shell, which has prioritised liquefied natural gas over renewables.

Now, under a new chief executive, fossil fuels are back on the menu. Oil and gas output is set to climb again, while spending on renewables will be cut by 70%.⁴ BP has already ditched some big projects like its US onshore wind business.

What does this mean for shareholders? Well, a lot of them aren’t happy - but for very different reasons. Some big investors, like Legal and General, are ‘deeply concerned’ about the pivot back to oil, arguing that climate change ‘represents a financially material and systemic long-term risk’ to client portfolios. Others - such as activists at Elliot Investment Management - objected to the original green strategy.

In August, we will get a glimpse of whether the new approach is paying off. Specific things to look out for include news on share buybacks, which were cut earlier this year, return on invested capital figures, and production rates.

Ultimately, though, it’s still early days for a radically new strategy.

BP is expected to publish half-year results on 5 August.

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Diageo

Diageo grabbed headlines earlier this month, when it announced the immediate departure of its chief executive, Debra Crew. She had been at the helm for just two years.

Crew’s resignation follows a tough period for the FTSE 100 drinks company, which owns brands like Guinness and Tanqueray. After a successful lockdown, which saw customers splashing out on premium spirits, Diageo faced a cost-of-living crunch, followed by a Trump-induced trade war.

Weight loss drugs and a rise in teetotalism are also stoking investor concerns. Terry Smith, of Fundsmith Equity fame, told investors he suspects ‘the entire drinks sector is in the early stages of being impacted negatively by weight loss drugs. Indeed, it seems likely that the drugs will eventually be used to treat alcoholism such is their effect on consumption”⁵

Diageo will publish its full-year results on 5 August - and analysts aren’t expecting fireworks. The company has already scrapped its medium-term growth targets, and the consensus view is that sales, profits and dividends will all fall. Revenue isn’t expected to return to 2023 levels until 2029.

In January, analysts at Reburn Atlantic said ‘hopes for reinvigoration run high, [but] this is set against a very uncertain industry backdrop with moderating US alcohol consumption and the looming risk of tariffs’.⁶

A lot has happened in the world since then - but the sentiment still rings true. The hunt for a new chief executive only adds to the uncertainty.

Diageo will publish its full-year results on 5 August.

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International Consolidated Airlines

A fund manager recently described successful airline companies as ‘good houses on a bad street’. He was alluding to the external problems facing these stocks. The travel sector is very sensitive to the wider economy, for example, as holidays are often the first things to go when times get tough.

Airlines are particularly vulnerable, as their fixed cost base is so high. Just a small decrease in customer numbers can have a big effect on the bottom line.

That said, British Airways-owner International Consolidated Airlines - better known as IAG - has staged an impressive turnaround since the pandemic. In the past three years, it has increased revenue at an average rate of 56% and grown its net operating margin from -35% to 13%.⁷ Management also brought back the dividend last summer.

2024 was another strong year. IAG beat market expectations, and announced a €1bn share buyback, helped by strong demand for BA flights and lower fuel costs. And earnings are expected to rise again in 2025 - albeit more slowly than last year.

There are a couple of pressure points. Fewer people are booking flights to North America - particularly in economy class. “If that economy weakness spreads into premium, there may be a slight risk to forecasts,” Peel Hunt transport analyst Alex Paterson warned⁸.

Demand for flights more generally will also be under scrutiny. Since the pandemic, so-called ‘revenge’ travel has fuelled revenue growth at airlines. Whether this will continue is uncertain, however - and strikes, jumps in the cost of fuel, and issues with aircraft deliveries are equally hard to predict.

International Consolidated Airlines is due to publish interim results on 1 August.

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Aviva

The interim results of insurance giant Aviva will be a little different this year. On 14 August, it will publish its first update as the official owner of Direct Line, which it bought for £3.7bn just a few weeks ago.

Shareholders are excited about the mega-deal, eyeing big profits and big dividends. (The latter is crucial, as most investors hold insurance stocks for the income). Direct Line also aids Aviva’s long-term strategy: to pivot slightly away from life insurance - which is lowly valued by the market - and towards less capital-intensive work, like motor and home insurance.

Aviva is aiming for operating profit of £2bn⁹ by 2026, compared with £1.76bn in 2024. Mega deals come with a lot of risks, however, and investors will be watching closely to see whether Aviva’s cost-cutting plans are on track. The insurer is targeting savings of £125mn within the next three years, with lots of head office and senior management jobs set to be cut.

Aviva is certainly starting from a strong position. In 2024, it grew profits by a fifth after a bumper spell for its retirement business¹⁰. It also occupies a very powerful position in the insurance sector: according to analysts at Morningstar, it now has a 15% share of the UK personal lines market. The next few months will be crucial, though - and very expensive.

Aviva will publish its interim figures on 14 August.

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Past performance is not a reliable indicator of future returns.

Source: Refinitiv and Morningstar, price index returns for gold, silver and S&P 500, total returns for BP and Shell. All data from 30.6.20 to 30.6.25 in local currency. Excludes initial charge.

Source:

¹ Fresnillo financial results, 4 March 2025
² FactSet consensus estimates, July 2025
³ FactSet research note
⁴ 2025 BP capital markets update, 26 February 2025
⁵ Fundsmith annual letter to shareholders, July 2025
^6,7,8 FactSet research
⁹ Aviva Q1 2025 Trading Update
¹⁰ Aviva 2024 Full Year Results and Annual Report and Accounts