Here’s why Barclays shares rose 12% in February

Barclays shares had an impressive February. This Fool breaks down why, and explores if now is the time to buy more of the stock.

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Barclays (LSE: BARC) shares rallied last month. With the FTSE 100 rising just 0.1%, the bank went on a tear as investors pushed the stock 12.1% higher.

But what caused this jump? Its share price has struggled massively in recent years. So why are investors now so bullish?

I already own the stock. However, I don’t want to miss out on any potential further gains. Should I be loading up on more shares?

A strong year

Well, the main driving force behind its impressive performance was the release of its 2023 results. In this, Barclays announced major plans for a strategic overhaul, which will allow the business to streamline. Going forward, the bank will be split up into five divisions: UK Consumer, US Consumer, UK Corporate, Investment and Private & Wealth.

What also caught my eye was the large emphasis the business has put on returning value to shareholders. By 2026, it plans to return £10bn through dividends and share buybacks. That’s exciting news.

In my opinion, this is a major positive for Barclays shareholders. Banking stocks have endured a tough spell in the last couple of years. The pandemic more than took its toll on the market. To add to that, there was also the US banking crisis that sent Barclays stock tumbling. But given the market’s reaction, it seems investors believe that the business may be about to turn a corner.

Dirt cheap shares

So, can Barclays carry on this momentum?

I don’t see why not. Even despite its rise, its shares still look like good value. They trade on just six times earnings. Its price-to-book ratio, a common valuation metric used for banks, is just 0.4. That’s ridiculously cheap for a business of Barclays’ quality, in my opinion.

Its shares look like even more of a steal when I consider what the future has in store for the firm. I’m optimistic that things can only get better from here.

I’m sure the stock will face further volatility in 2024. A high interest rate environment will continue to challenge the firm. Impairment charges for 2023 rose to £304m from £286m the year prior. I also mustn’t forget that profits for 2023 fell by 6% for the year. Its lacklustre performance in the final quarter may also be a source of concern.

But I’m a long-term investor. It’s the years to come that I’m more focused on. As interest rates fall, I’m expecting banks to be provided with a boost as investor confidence in the economy picks up. In the meantime, there’s a 5% yield to tide me over.

Time to kick on

I started snapping up cheap Barclays shares last year. Today, I’m sitting on a 16.4% gain. But I don’t plan on stopping here. I think the stock can kick on from its strong February.

Of course, 2024 will be far from plain sailing. I’m expecting further challenges along the way.

But following its transformation plans, the years ahead could be exciting for Barclays. Its latest strategy update was the first since 2016. It seems CEO CS Venkatakrishnan has ambitious plans.

I think banking stocks stand in good stead to perform well over the next few years. Barclays is certainly one I plan to keep buying in the times ahead.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Charlie Keough has positions in Barclays Plc. The Motley Fool UK has recommended Barclays Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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