Is investing in Barclays a good idea right now?

Barclays' stock is inexpensive in comparison to its competitors, and its profit growth is robust

The banking industry in Britain is not doing well. The return of NatWest to complete private-sector ownership in the late spring of this year was arguably the most symbolic event. A final tranche of shares was sold by the government, which at one point held 84% of the troubled lender. NatWests isn't currently the most intriguing UK bank on the stock market, despite the fact that its shares have been doing well. Instead, I believe you ought to think about placing a wager on its rival, Barclays (LSE: BARC).

Barclays has come under fire for the subpar performance of its investment-banking division, despite being one of the few UK banks not directly bailed out by the government in 2008. Activist investors have even put pressure on the company in recent years to sell, spin out, or otherwise divide the investment banking division from the retail banking division. Still, CEO C. In S. Venkatakrishnan (Venkat) has continued to use a hybrid approach, maintaining the investment bank while attempting to expand the retail banking and wealth management divisions.

Barclays's profits are soaring.

Barclays' revenues and profits are still rising, suggesting that this strategy is currently effective. Even after adjustments, its reported profits are still two-thirds higher than they were in 2019 and are currently 125% higher. Dividends have more than doubled. It's true that there are some uncertainties ahead, including potential banking taxes in the next budget, exposure to private-credit loan portfolios, and ongoing litigation over the departure of disgraced boss Jes Staley. Experts, however, think that Barclays is in a good position when compared to its competitors, and the first issue is only a minor one.

The valuation of Barclays is a major factor in the company's optimism. The stock is trading at a discount of more than a quarter to its net asset value, less than eight times the projected 2026 earnings, and a smaller discount to its tangible book value. With NatWest trading at a 2026 price/earnings (p/e) ratio of 8.5, while Lloyds and HSBC both sell for 2026 p/es of 9.5, this makes it inexpensive both in absolute terms and in comparison to its competitors. The prices of all three of these banks are significantly higher than their net assets. The value of the main US investment banks is even higher.

Investors have undoubtedly taken notice of Barclays' improving fortunes, as evidenced by the company's rising share price. It is among the top performers in the FTSE 100 during this time, having increased by almost one-third over the previous six months. Over the last month and three months, it has consistently outperformed the blue-chip index and is currently trading above both its 50-day and 200-day moving averages. Therefore, at the current price of 405p at 9 per 1p per share, I would advise going long. In that scenario, I would set the stop-loss at 300p, giving you a 945p total downside.