Up 20% in a month, will this FTSE 100 stock continue to soar?

Ken Hall has been watching the FTSE 100 make gains this month. And there’s one big-name stock that has caught his eye as it continues to climb.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

2025 is off to a strong start for UK investors. The FTSE 100 index is sitting just shy of a new all-time high, beating the record set last May.

At face value, this is puzzling. Many experts are forecasting sluggish growth for the UK economy and borrowing costs are at a 10-year high. Government spending is under the microscope with concerns it will keep inflation higher for longer.

However, the weaker British currency benefits multinationals that earn much of their money in the US, and investors continue to pile money into equities. This has helped keep UK stocks buoyant despite the general doom and gloom.

Should you invest £1,000 in Berkshire Hathaway right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Berkshire Hathaway made the list?

See the 6 stocks

Amid this turbulent start to the year, the UK large-cap index has climbed 5.4% in the past month to 8,542 points as I write on Thursday (23 January). And among the many high performers, there’s one FTSE 100 banking stock that has really caught my eye.

Strong start to the year

The Barclays (LSE: BARC) share price has gone from strength to strength in recent times. It has more than doubled in the past year to £2.94 per share as of today. This is seriously impressive growth in a short space of time and it has propelled the company’s market cap to over £40bn.

Created with Highcharts 11.4.3Barclays Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Chief executive CS Venkatakrishnan has proven popular with investors since taking the reins in late 2021, with a promise to return £10bn to shareholders via share buybacks and dividends over the next three years.

An 18% increase in third-quarter 2024 pre-tax profits to £2.2bn exceeded analysts expectations with strong investment banking performance providing a boost. All of that as Venkatakrishnan aims to deliver on his promise to reduce the relative size of the more volatile trading and investment banking division.

Higher borrowing costs could also potentially help the bank as it looks to boost its net interest income(NII). This is essentially the difference between the bank’s interest earned on assets and interest paid to customers. Resilience in bank loan books alongside higher interest rates has helped boost Barclays and other bank’s valuations in 2025.

Valuation

So, it’s clear that the Barclays share price has been on a run lately. How does that compare to its UK banking peers?

The NatWest share price has climbed 95.7% in the last 12 months to £4.18, while HSBC shares are up 37% to £8.22 over the same period.

That leads me to relative value. Barclays looks good value at first glance with a price-to-book (P/B) ratio of 0.6. That compares favourably to both NatWest and HSBC at 0.9 and 1.0, respectively.

However, P/B ratios aren’t the only metric to consider. The bank’s 2% dividend yield lags behind NatWest’s figure of 2.9%, while a price-to-earnings (P/E) ratio of 11.8 is well above the 8.7 that both NatWest and HSBC are trading at right now.

Will I consider buying?

Barclays isn’t a stock that I’m looking to buy right now. The bank’s relative value to peers is mixed and there’s a strategic transformation under way to turn around its profitability.

There’s no doubt the recent share price run has been impressive but I’m not sure it will continue. I’ll be focusing my attention on more defensive sectors within the Footsie, like pharmaceuticals, for the time being.

Pound coins for sale — 31 pence?

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.

Ken Hall has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays Plc and HSBC Holdings. 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.

More on Investing Articles

Investing Articles

Up 30% in weeks, does the BAE Systems share price still offer value?

The BAE Systems share price has been on a tear over the past couple of months. This writer sees limited…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Hunting for shares to buy as the market trembles? Remember this!

After a choppy week in global stock markets, our writer goes back to basics in his hunt for bargain shares…

Read more »

Investing Articles

3 simple principles to help build wealth in an ISA

As a new tax year opens up new ISA allowances for many investors, our writer shares a trio of things…

Read more »

Investing Articles

US trade tariffs: what they could mean for UK shares like Ashtead, Compass Group, and Experian

US trade tariffs continue to rock global markets, and the UK is no exception. Our writer considers how a new…

Read more »

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Dividend Shares

The Trump slump has smashed these FTSE 100 shares!

After a rough week for US and UK shares, investors have been shaken. But now these FTSE 100 stocks have…

Read more »

Investing Articles

£10,000 invested in Rolls-Royce shares 5 years ago is now worth…

Rolls-Royce shares have been on fire since April 2020. Part of this is the result of pandemic restrictions lifting, but…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

£10,000 invested in Tesla stock at its peak in 2024 is now worth…

Over the last few months, Tesla stock has lost nearly half its value. Here, Edward Sheldon explores a few takeaways…

Read more »

Investing Articles

Is the S&P 500 heading for an epic stock market crash?

Our writer shares his thoughts on a very crazy time for the S&P 500 and the wider stock market. How…

Read more »