£10k invested in Barclays shares on ‘Liberation Day’ low is now worth…
Barclays‘ (LSE: BARC) shares are roaring back after reports that the US has struck a surprise trade deal with China. But the Barclays share price bounce started well before today.
When the FTSE 100 closed on 2 April, Barclays was trading at 296.75p. Hours later, Donald Trump dropped the bombshell about his so-called ‘Liberation Day’ tariffs, and markets fell.
As always, The Motley Fool urged calm. No panic-selling or rushing for the exits. Just sit tight and scan the market for classic buying opportunities. Anyone who picked Barclays should be happy today.
By 7 April, with panic still swirling, its shares had dropped more than 18% to just 241.85p. Today, they’re trading at 315.55p, up more than 30%. That would have turned a £10k investment into around £13k.
Long-term momentum
Long-term investors should also be feeling pleased. Barclays shares are up 45% over 12 months, and 191% over five years. FTSE banks are finally showing sustained strong performance, following more than a decade of post-financial crisis volatility.
Yet Barclays still looks surprisingly affordable. Its price-to-earnings ratio is just 8.5. On a price-to-book basis, itâs only 0.6. Thatâs a solid discount given that a figure of one is seen as fair value.
The dividend yield isnât enormous at 2.66% on a trailing basis, but forecasts suggest it could grow to 2.89% this year and 3.89% in 2026. That’s not all. The board has pledged £10bn in total capital returns between now and 2026, mostly in the shape of share buybacks.
Barclays also looks in strong financial shape. In Q1, it posted a return on tangible equity of 14%, well above its annual target. Profit before tax rose 19% to £2.7bn and total income rose 11% to £7.7bn. It’s also raised its full-year income forecast to more than £12.5bn, up from £12.2bn, citing strength in its UK business.
Concerns remain
No investment’s ever risk-free. The trade deal bounce might not last. Trump’s unpredictable and further tariff volatility canât be ruled out. Markets are still waiting for concrete details on US-China talks, and thereâs a risk that confidence could fade if clarity doesnât emerge soon.
Also, if interest rates continue to fall this could eat into net interest margins, a crucial measure of banking profitability. And of course, the UK economy’s still in a mess.
Dividends, growth and buybacks
Even with those uncertainties, thereâs a lot to like here. Of the 18 analysts tracking Barclays, 14 rate it a Strong Buy, three say Hold, and only one’s unimpressed, naming it a Strong Sell.
The 16 analysts offering one-year share price forecasts have a median target of 361p. If that proves right, it would mean a 14% gain from current levels. Forecasts can never be relied upon and this does confirm my suspicions that Barclays shares have to slow at some point. Nobody should expect another 30% jump any time soon. That kind of surge is rare and unpredictable.
But given Barclaysâ solid performance, financial strength and amenable valuation, I think itâs a stock investors might still consider buying today.
The post £10k invested in Barclays shares on âLiberation Dayâ low is now worth… appeared first on The Motley Fool UK.
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More reading
- 3 growth stocks up 27% in a month to consider buying now
- Does the Barclays or Lloyds share price offer best value?
- Hereâs the dividend forecast for Barclays shares through to 2027!
- £5,000 invested in Barclays shares a month ago is now worthâ¦
- 3 cheap UK stocks to consider buying in an ISA before the next big market rally
Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays 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.
