Home Stock list Here’s why Barclays stock is on my 2022 FTSE 100 Best Buys list

Here’s why Barclays stock is on my 2022 FTSE 100 Best Buys list


It’s a good time to FTSE100 banks. After being held back during the pandemic, this cyclical sector is more than rebounding. It shows outstanding results. As in the case of Barclays (LSE: BARC), which released its full-year results update for 2021 earlier today. I have long been optimistic about the banking sector, and after reviewing the general macroeconomic situation and their latest results, I am even more so.

Barclays’ strong earnings

Let me elaborate. Barclays net profit rose nearly 275% on a year earlier to £7.2bn. Investment banking pre-tax profits hit a new high. It was helped by a release of credit impairment. This cancels charges set aside during the pandemic for fear of a rise in bad debts. Barclays dividends are also now at 6p per share, up significantly from 1p in 2020 as banks are free to set their dividends. The bank’s dividend yield, however, remains low at 3%, still below the 3.5% seen for the FTSE 100 index as a whole.

5 actions to try to create wealth after 50

Markets around the world are reeling from the coronavirus pandemic… and with so many big companies trading at what appear to be “discount” prices, now may be the time for savvy investors to get in on the business potential.

But whether you’re a newbie investor or a seasoned professional, deciding which stocks to add to your shopping list can be a daunting prospect in these unprecedented times.

Fortunately, The Motley Fool UK analyst team has shortlisted five companies that they believe STILL offer significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a FREE special investment report that you can download today. And if you’re 50 or older, we think these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Why so undervalued?

However, I am optimistic that dividends could improve in 2022. This could be a good addition to the potentially significant capital growth I expect from Barclays shares this year. After its latest results, the bank’s price/earnings ratio (P/E) is at a low 5.3 times, making it an extremely undervalued stock in my view. The FTSE 100 P/E is currently sitting at 16 times, which would be an indication of its price weakness. It can be argued that banks have a low P/E due to limited growth potential. It’s possible, but I still think Barclays is undervalued. Indeed, even among its peers, it has the lowest win ratio.

Bullish on Barclays stock

And the fact that its profits should to augment in 2022 indicates that the case for a Barclays share price rally has become more compelling. No wonder then that its share price exploded today. When I last checked on Wednesday afternoon, it was trading 3% higher than its last close. It is also the third biggest gainer on the FTSE 100 today so far. Plus, I like that analysts are really optimistic about it. Even the most pessimistic analysts expect its share price to rise slightly this year, and the most optimistic actually see a 75% increase according to estimates compiled by the FinancialTimes. These could change as circumstances change, of course, but they’re indicative of the stock’s potential at the moment.

What I would do

Sounds like a fairy tale investment, doesn’t it? Well, what’s one without a few dragons to slay! Inflation, in particular, is of concern. It is true that the bank benefits from rising prices which translates into higher interest rates as the economic recovery creates greater demand. But its costs are also expected to rise. Moreover, too much inflation is never good for growth and banks. So I would pay attention to that. Overall though, Barclays stocks look really good to me. I would buy it now.

FREE REPORT: Why this £5 stock could rise

Are you looking for UK growth stocks?

If that is the case, get this FREE report without chains now.

While it’s available: you’ll experience what we believe will be a growth title for the decade to come.

And the performance of this company is truly breathtaking.

In 2019he made £150million to shareholders through redemptions and dividends.

We think his financial situation is about as strong as anything we’ve seen.

  • Since 2016, annual revenues increased by 31%
  • In March 2020, one of its senior executives CHARGE on 25,000 shares – a post worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are increasing every year!)

Quite simply, we think it’s a fantastic insane growth choice.

Moreover, it deserves your attention today.

So please don’t wait a moment longer.

Get all the details on this £5 stock now – while your report is free.

Manika Premsingh has no position in any of the stocks mentioned. The Motley Fool UK recommended Barclays. The opinions expressed on the companies mentioned in this article are those of the author and may therefore differ from the official recommendations we give in our subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that considering a wide range of information makes us better investors.