The FTSE 100 is already down 5% since the turn of the year, with panic in China leading the rout. When that happens, the banks usually suffer badly, and Barclays (LSE: BARC) has been no exception with its shares plummeting to a 52-week low of just 186p on Monday.
Barclays’ investment banking arm is a bit of a drag on the company right now, and nobody has any idea of how much more in fines through regulatory investigations we have yet to see. But Barclays’ retail banking division is doing fine, it’s passing all the Bank of England stress tests with ease, and forecasts are looking good.
Now, these forecasts might be downgraded a little. But with EPS rises of 24% expected for the year just ended and 21% for 2016, we’re looking at prospective P/E multiples of only 8.7 for December 2015, dropping to just 7.2 a year later. With dividends expected to yield around 3%, rising to 3.6%, I agree with the analysts’ consensus that Barclays remains a firm long-term buy.
I see NEXT (LSE: NXT) as probably our best high street clothing retailer, with the company having put in five straight years of double-digit EPS growth. That’s expected to slow to single-figure growth this year and next, but with the company planning to pay out surplus cash as special dividends, we should be seeing total yields of around 5% and 5.3% for January 2016 and 2017, respectively.
Those high yields are boosted by the current share sell-off, with a slightly disappointing Christmas shopping period having helped push the price down to a 52-week low of 6,520p on 14 January. In fact, NEXT shares are down a surprising 16% in just the few weeks since 3 December.
The price has recovered a little from that low, to 6,755p, but I see that as still leaving the shares too cheap. The tipsters have NEXT as a buy by a ratio of two-to-one over sell, but the majority of them are neutral. I see NEXT as a nice long-term investment.
My third doing brick impressions is BBA Aviation (LSE: BBA), whose shares are down 32% over the past 12 months, having slumped to a 52-week low of 158.7p on Monday. The firm offers aviation support, and its engine repairs and overhaul business has been falling behind expectations according to a trading update released in December. And there’s a 10% drop in EPS expected for the year to December 2015, which would put the shares on a P/E of 11.5, dropping to 10 based on a 14% EPS recovery currently forecast for 2016.
Dividends remain strong and almost twice covered, with a likely yield of 4.5% on the cards for the year just ended, rising to 4.7% for the year ahead.
Does BBA look like another oversold bargain to you? It does to me. Full-year results due on 3 March are keenly awaited.
Alan Oscroft has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended BBA Aviation. The Motley Fool UK has recommended Barclays. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.