The FTSE 100’s Hottest Growth Stocks: Barclays PLC

Today I am outlining why Barclays (LSE: BARC) (NYSE: BCS.US) could be considered a terrific stock for growth hunters.

Bank is finally on the bounce

Barclays has worked night and day to repair its battered reputation — not to mention balance sheet and earnings profile — after the 2008/2009 financial crisis smashed the bottom line. The road has been a long one, and the business has posted negative growth in three of Barclaysthe past five years.

Still, the City’s number crunchers expect the company to finally punch sustained growth from this year onwards owing to its vast restructuring programme. Through its ongoing Transform cost-cutting scheme, the business has stripped out swathes of wastage, achieved through a multitude of measures from branch closures through to improvements to back office functions.

At the same time Barclays’ massive investment in new technology, from improving its mobile banking platforms through to introducing touch-payment wristbands for use at the checkout, is also boosting cost efficiency as well as putting it at the cutting edge in line with changing consumer habits.

Value that is impossible to ignore

Against this backcloth, analysts expect Barclays to snap from last year’s horrendous 56% earnings decline with growth of 30% this year, to 21.7p per share. And a further 25% advance is forecast for 2015, to 27p.

And these projections make the bank an exceptional value pick in my opinion. This year’s projection creates a P/E multiple of just 10.7, just above the value benchmark of 10 and vastly better than the forward average of 15.4 for the complete banking sector. And Barclays’ stunning earnings forecasts for 2015 drives this even lower, to just 8.5.

Indeed, the bank’s excellent value relative to its growth prospects are underlined by price to earnings to growth (PEG) numbers of just 0.4 and 0.3 for 2014 and 2015 correspondingly, well within the bargain yardstick of 1 or below.

Of course, it could be argued that rising regulatory risks, a multitude of legal issues — from the mis-selling of PPI through to Libor and exchange-rate fixing — and signs of a slowing eurozone economy justifies the bank’s lowly price rating.

But in my opinion a revamped Barclays’ enhanced focus on the UK high street, and gradual withdrawal from riskier trading activities, should help to deliver spectacular earnings growth in coming years, particularly as the British economic revival hots up.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.