Tuesday 11 November 2014

Barclays (BARC) ... stars aligning?

Tuesday 11th November 2014

Pursuant to an inspection of the Barclays (BARC LN) share chart, I bought a few November 245p calls for a penny. 

Over in the US, JP Morgan (JPM US), Goldman Sachs (GS US), Citigroup (C US) et al have rallied sharply over recent weeks. By contrast, the UK/Euro names remain in a funk. Relative valuations may pave the way for a sharp bounce in BARC. That said, this may have to wait for the forthcoming regulatory assault on December 16th 2014 when the Bank of England publishes the results of its stress test of the British banking system.   

Nonetheless, chart wise, I reckon this to be an interesting level on BARC; with the stars beginning to align. 

It's currently sat on its 200 day moving average, teasing to potentially break above this and out of its down channel; prevalent since July 2013. The nearer term moving averages are also beginning to turn up, with the prospect of a Golden Cross coming into play. 260p near term looks likely.  

While the UK banking scene continues to go through its trials and tribulations, in terms of current valuations, BARC is certainly the cheapest amongst its peers. It trades on a price to book value of 0.64x as compared to peers ranging from 0.82x (Citigroup) to 1.26x (Goldman Sachs & Lloyds). 

Similarly on a forward P/E basis, it's also the cheapest of the bunch. 

By contrast, it currently yields the highest dividend, whilst offering one of the highest prospective yields during the next few years.

Overall, any break higher may not come in time for November 21st, but November 245 calls at a penny were enticing enough to place a small wager on the technicals prompting a run up.   

BARC - share price
Source: Bloomberg
Barclays relative to Goldman Sachs
Source: Bloomberg
Barclays price to book relative to peers
Source: Bloomberg
Barclays forward P/E relative to peers
Source: Bloomberg
Barclays prospective dividend yield relative to peers
Source: Bloomberg
Disclaimer: The information, discussions or topics referred to on this blog should in no way be considered “advice” to buy or sell anything. The information which may be referred to is freely available in the public domain and where required the source of information is referenced to for verification. While every effort has been made to ensure the veracity of any information contained within this blog, the author accepts no responsibility for the accuracy of any information contained within this blog or for the sources of information which may be referred to. Readers are responsible for their own actions and interpretation of the information contained within this blog. 

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