Here’s why I think the Barclays share price could top the FTSE 100 banks in 2025

The Barclays share price has seen a strong resurgence in 2024 after years out in the cold. Can 2025 carry on the upwards trend?

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With a rise of a shade under 80% in 2024, the Barclays (LSE: BARC) share price has only fallen short of this year’s winning bank by a fraction.

NatWest Group just edged it out. Or at least, it has done with a few market days left before the year ends. So maybe there’s still time for change.

Created with Highcharts 11.4.3Barclays Plc + NatWest Group Plc PriceZoom1M3M6MYTD1Y5Y10YALL0www.fool.co.uk

International strength

One thing I think could propel Barclays to the winning position in 2025 is, perhaps ironically, also something I see as one of its key risks.

Should you invest £1,000 in Barclays right now?

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At Q3 time, the company told us that Barclays Investment Bank “has a diverse income profile across businesses and geographies including a significant presence in the US.” That arm of the business contributed £3,303m in profit before tax in the first nine months of the year.

Global corporate and investment banking has been known to go a bit wrong in the past. And after the financial crisis, Barclays was the only UK bank that really stuck with it.

It could go wrong again. But in the first year of the new US administration, with President-elect Trump seemingly more likely to loosen banking regulation than tighten anything? I reckon Barclays could get a boost that its UK high street competitors will miss.

Latest scandal

I can’t look at any UK bank without thinking about the current car loan mis-selling probe. It affects Barclays, which has been in the news in recent days.

The bank had appealed a ruling by the Financial Ombudsman Service that it had failed to treat a car loan customer fairly. But a judge has dismissed the appeal.

Some observers suggest the total hit to the banks could reach £38bn.

But at least Barclays’ expected share of it looks relatively low right now. Estimates suggest its provisions should be well below Lloyds Banking Group‘s, for example. So it’s not a good thing, but it might be relatively not as bad.

Cash flowing

The Barclays share price has surely been helped by the bank’s approach to rewarding shareholders with cash. We’re only looking at a forecast 3.1% dividend yield for this year, though forecasts show it rising in the next few years.

But I think Barclays’ big winner is its aggressive share buyback strategy. At the end of the last full year, the bank said it plans to “return at least £10bn of capital to shareholders between 2024 and 2026, through dividends and share buybacks, with a continued preference for buybacks“.

That’s worth more than a quarter of Barclays’ total market-cap. As well as any per-share improvements that buybacks can generate, it surely has to boost investor sentiment too.

Valuation

I just noticed something else. Looking at forecasts out to 2026, the Barclays price-to-earnings (P/E) ratio’s estimated at just 5.5 by then. That’s firmly below Lloyds, NatWest and HSBC Holdings.

International uncertainty, mis-selling, a dodgy economic outlook… they all mean risks for banks in 2025. But I think investors with a long-term vision might consider them worth taking.

But here’s another bargain investment that looks absurdly dirt-cheap:

Like buying £1 for 31p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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.

Alan Oscroft has positions in Lloyds Banking Group Plc. The Motley Fool UK has recommended Barclays Plc, HSBC Holdings, and Lloyds Banking Group 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.

Like buying £1 for 51p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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