Wednesday, October 18

Barclays: A Hidden Gem in Banking

With most bank earnings coming back stronger than expected, we're now flush with enough confidence to diversify our strategies in the financial sector. 

There's a lot of volatility in bank valuations right now as a lot of complex factors are bolstering some banks while unfairly holding others down. 

So, we were very excited to discover that Barclays ($BCS) was still being drastically undervalued despite the U.S. banking industry reporting a lot more strength than expected for Q3. 

Sure, the European banking system is facing a lot more headwinds than its U.S. counterparts, but we still see this pessimism as fundamentally overblown compared to the reality European banks are facing. In particular, Barclay's is getting hit with a much lower-than-deserved valuation in light of their fundamentals.

The pessimism around European banking is so bad that Barclays is basically trading at the same P/E ratio they did during the height of the pandemic panic in March/April of 2020. That level of misplaced bear sentiment presents a discount that's too good to pass up.

Barclays has great strengths that will not only set them surging in the short term as we get a better view of the credit card and commercial real estate industries, but also have enough growth in the pipeline to make them a long-term winner once we move into a period where investors feel more confident about the strength of the worldwide economy. 

So, let's take a high-level look at Barclays and how they've managed to maintain operations and boost profitability without promising to take on more substantial cost-cutting initiatives. 

While the details here can get pretty dry, we promise we'll keep things to the more impactful data points. Let's get into it.👇

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