Opinions Paul Harris, CFA
Barclays Bank PLCBCSPAST TOP PICKAug 20, 2015
Paul Harris, CFAOwned
$16.46
Stock price when the opinion was issued
$25.01
As of Jun 04, 2026. Market Open.
banks
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DON'T BUY
UK banking sits somewhere between the Swedish/Canadian model and the US model. Fewer players, strong and well-protected balance sheets, growing organically. It's OK, but you are exposed to the UK and its pressures on consumers, housing, and the economy. Valuation is OK. He'd prefer a Canadian pick. Yield is 2.9%.
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Premium contentPAST TOP PICK
(A Top Pick Oct 07/21, Down 3.7%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with BCS has triggered its stop at $10.25. To remain disciplined, we recommend covering the position at this time. This will result in a net investment loss of 1%, when combined with the previous buy recommendation.
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Premium contentPAST TOP PICK
Premium contentPAST TOP PICK
Premium contentTOP PICK
Stockchase Research Editor: Michael O’Reilly We reiterate BCS as a TOP PICK. The UK top ranked retail bank is well diversified across personal, corporate, investment banking, credit and wealth management. It trades at 7x earnings compared to peers at 14x and it trades below book value. It has a small dividend, backed by a payout ratio of 50% of cashflow and it is building its cash reserve holdings. We would buy this with a stop loss at $9.25 looking to achieve $12.50 -- upside potential over 16%. Yield 2.05% (Analysts’ price target is $12.46)
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Premium contentTOP PICK
Stockchase Research Editor: Michael O'Reilly BCS is one of the UK's top retail banks and is well diversified across personal, corporate, investment banking, credit and wealth management. It trades at 6x earnings compared to peers at 12x. With a good earnings outlook, its PEG ratio is only 0.18 and it trades below book value. It has a small dividend, backed by a payout ratio of only 10% of cashflow and it is building its cash reserve holdings. We would buy this with a stop loss at $8.25 looking to achieve $12.50 -- upside potential over 25%. Yield 0.61% (Analysts’ price target is $12.54)
banks
WEAK BUY
Best European bank? European banking is difficult, given negative interest rates. Best in class is Barclay's for its investing banking business or Lloyd's Banking. There should be more consolidation here, but it's difficult in Europe (look at ATD'B trying to buy Carrefour this month).
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COMMENT
Barclays vs. Deutsche Bank He prefers Deutsche Bank, because it trades at a much lower valuation. Both trade at a fraction of their book value. Deutsche Bank has turned a corner with cost-cutting, though Barclays pays a better dividend. He likes European banks because they've been so beaten down and are trading at a fraction of valuation of the US banks. This is a pivotal year for Deutsche Bank and it should enjoy a big earnings bump.
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BUY
Deustche Bank vs. Barclay's DB is poorly run; he much prefers Barclay's. DB has gone though massive restructuring with many difficulties, still is. They've had a poorly run retail banking business. With their investment bank, they've bought a lot of things without integrating their technology. So, after the 2008 crash, things got very difficult for DB. A lot of their business was in fixed income where a lot of capital is used. Barclay's is in a much better position. They bought Lehman Brothers; has a great retail business; great credit card and superb investment bank businesses. It's run by an ex-JP Morgan buy. DB is a trade at best, while Barclay's will see growth for a while.
banks
(A Top Pick Aug 14/14. Up 14.95%.) People disliked the stock, but they have some very important franchises. A great retail bank in the UK, good presence in Africa, great credit card business and a reasonable asset management business. They bought Lehmans Investment Bank, and that is the big issue with this company. There are a lot of capital issues that they face, but they are changing that and that is where the upside is.