Hands up everyone who, if asked 12 months ago, would have predicted a 52-week low for Barclays (LSE: BARC) a year on?
Certainly not me, as Barclays seemed to be bounding back to strength and a strategy of focusing on its strong retail operation looked set to bear fruit. The City’s analysts have been predicting good things, and today we have an EPS rise of 24% expected for the year just ended, followed by a further 21% for 2016.
That puts the shares on a forward P/E for this year of just seven on today’s 180p share price! Dividends are recovering too, with a 2016 yield of 4.6% on the cards, and the company even has a PEG ratio of just 0.3 — that’s way better than expected even for small cap growth opportunities!
The big fear is probably of possible future penalties for historical transgressions, and there have been hints that the authorities still plan to come down hard. But in the context of Barclays’ fundamental strength, what I see here is a panic-driven over-reaction — and a great investment bargain.
I see no building slump?
Construction services firm Carillion (LSE: CLLN) showed up on my radar as a potential dividend stock, with a 6.7% yield currently expected for the year just ended, on shares priced at 270p, rising to 6.9% this year — and those dividends would be covered 1.9 times by earnings per share.
Carillion sounded caution in its pre-close update, while we await full-year results on 3 March, but its contracts pipeline sounded healthy and the firm reckons it’s set to meet its guidance.
So how come the shares hit a 52-week low of 265p and today trade just a little higher at 271p? It beats me, but a forward P/E of 7.8 for the coming year coupled with dividend yields in excess of 6% have made me add Carillion to my watchlist for my next share purchase.
Soft drinks crash
Shares in beverages maker AG Barr (LSE: BAG) have slumped by 25% in little more than a year, to 518p — up a little from a low of 504p last week. In December, the firm told us it expected to meet its full-year guidance for the year to January 2016, so that’s good news for shareholders.
But the problem is, although this is a strong company with decent forecasts and surely a good future, I think the price slide has been fully justified — because the shares were simply overvalued a year ago.
Even after the fall, we’re still looking at a prospective P/E for the current year of 18, dropping only as far as 17 in the following year. On top of that, dividend yields are hardly sparkling at around 2.6%.
AG Barr looks like one of those safety stocks that people rush to when they’re frightened, but the time is now surely ripe for the courageous — who, I reckon, would do well to invest in Barclays and Carillion instead.
