After hitting 2024 highs, is the Barclays share price set to slump?

The Barclays share price has been on a storming run, soaring almost 55% in six months. But after such strong gains, will it weaken from here?

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So far, UK shares have had a solid start to 2024. As I write, the FTSE 100 index is up 5.7% since 29 December 2023, beating other major market indexes this year. What’s more, some stocks have surged strongly, including the Barclays (LSE: BARC) share price.

Barclays stock soars

Since the global financial crisis (GFC) of 2007-09, British bank shares have been a damp squib, lacking long-term upwards momentum. Barclays stock is no exception. However, unlike several major UK lenders, the Blue Eagle bank wasn’t bailed out by taxpayers during the GFC.

Then again, during the Covid-19 crisis of 2020-21, the Barclays share price experienced some sickening price falls. On 3 April 2020, it closed at 80.24p, down over 56% from its early January high.

That said, the Barclays share price has been on a roll in recent months. As I write, it stands at 203.55p, valuing this business at £30.6bn. That’s just 1.9% below its 2024 high of 207.5p, hit on Monday, 29 April.

Here’s how this stock has risen over six timescales:

Five days+5.7%
One month+10.6%
Six months+54.7%
YTD 2024+32.4%
One year+31.4%
Five years+24.4%
*These figures exclude dividends.

I can’t remember the last time the Barclays share price showed such positive, sustained momentum. Over 12 months, the shares are up almost a third, while they have risen in value by nearly a quarter in a half-decade.

Also, it’s important to note that the above figures exclude cash dividends, which are pretty generous from Footsie shares. Indeed, my wife and I hold several banking stocks in our family portfolio for this income.

For the record, my wife and I own Barclays shares. We paid 154.5p a share for our stake in July 2022. To date, we are sitting on a paper profit of 31.8%, but that’s not all. We’ve also received four dividends, totalling 15.25p a share (another 9.9% of our investment), which we reinvested into more shares.

What next for the share price?

Lacking a crystal ball or magic wand, I’m always reluctant to predict future short-term price movements for shares. To me, this is a mug’s game, so I look to company fundamentals when weighing up stocks.

As to whether the Barclays share price will slump, who knows? What I will say is that this stock looks attractive to me, but less so than when it traded at the 52-week low of 128.12p on 30 October 2023.

Currently, the shares trade on a multiple of 7.9 times earnings, producing an earnings yield of 12.6%. Therefore, their dividend yield of 3.9% a year is covered a healthy 3.2 times by trailing earnings. From these and other figures, I see no reason to sell our stock.

Nevertheless, I expect bank earnings to take a knock in 2024, driven down by slower credit growth, rising bad debts, and higher loan losses. The cost-of-living crisis has hit household budgets hard, making bank bosses worried about weaker profits.

Summing up, I’m not that bothered about short-term shifts in the Barclays share price. We are backing the Blue Eagle bank for the long run and so will hold tightly onto our stake!

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.

Cliff D’Arcy has an economic interest in Barclays shares. The Motley Fool UK has recommended Barclays. 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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