Over the past five years, this recruiter has reported average earnings per share growth of nearly 18% per annum and the dividend has surged from 10.5p to 22.3p (based on City estimates for 2019). 

It doesn’t look as if growth is going to slow down any time soon. Today the company recorded an 11.4% increase in half-year operating profit as it benefits from rising demand for its services around the world. 

Global diversification

Page’s global diversification has been a huge positive for the business over the past five years. As hiring growth has slowed in its most challenging markets, the company has switched resources to faster-growing markets, such as the US.

Indeed, commenting on today’s results, CFO Kelvin Stagg said that while “fee earner headcount fell by 81,” or 1.3%, during the first six months of the financial year, headcount fell mainly in markets that were “more challenging, such as Greater China and the UK.” Meanwhile, Stagg reported that the company continues “to invest in markets where we saw the greatest growth, such as the US and India.” 

This is all part of Page’s long-term plan to increase its headcount to 10,000 employees (up from around 6,000 at present) and grow sales to £1bn with £250m of operating profit. For the first half of the year, group operating profit increased by 11.4% to £75.6m with a 12.5% increase in reported rates. 

What’s most impressive about this business is its cash generation. Page ended June with net cash on the balance sheet of just under £82m. Management is looking to return a chunk of this cash to investors.

Today it has announced a special dividend of 12.73p per share, on top of its regular distribution (which is also rising 4.9%) of 4.3p — the fifth consecutive year of special dividends.

The total distribution amounts to a cash return to shareholders of £54.9m, or 17p per share. For the full-year, analysts believe the company’s dividend will total 22.8p including a final year-end payout, which translates into a potential dividend yield of 5.2%. 

Double your money

If Page is not for you, then another stock I believe could be an excellent investment for your portfolio today is financial services group CYBG (LSE: CYBG). 

After acquiring the Virgin Money brand last year, analysts are expecting CYBG to report a substantial profit of 24.4p per share for 2019 which, if achieved, would put the stock on a forward P/E of 6.2. Analysts also believe that the company has the potential to double its dividend payout for the year to 6.4p, giving a dividend yield of 4.3% at the current price. 

These metrics are extremely attractive, and it only gets better. As well as trading at a mid single-digit P/E ratio, shares in CYBG are also dealing at a price-to-tangible-book-value of less than 50%. This might be appropriate if the bank was losing money, but with analysts expecting a net profit of £342m for 2019, rising to £358m for 2020, it does not make any sense at all.

These metrics imply that the stock has the potential to double from current levels, and with a dividend yield of 4.3% on offer, investors will be paid to wait for the turnaround. 

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

CYBG is the holding company for a collection of small banks, including Virgin Money, which it acquired towards the end of last year, alongside Clydesdale and Yorkshire Bank. For the past few years, the firm has struggled to grow in the UK’s increasingly competitive retail banking industry. But, according to City analysts, the acquisition of Virgin Money last year should change that. 

Primed for growth

The City has pencilled in revenue growth of more than 60% for the enlarged group in 2019, and a net profit of £355m. If CYBG hits this profit target, the bank will earn 24.4p per share for the year, putting the stock on a forward P/E of 7.6. 

As well as earnings growth, it also looks to me as if shares in CYBG are trading at a deep discount to the tangible net asset value. According to the banking group’s half-year results, tangible net asset value per share was 260.1p at the end of March, 44% above the share price of 180.7p at the time of writing. 

So, it seems to me that whichever metric you use to evaluate shares in CYBG, they look cheap. But what about the company’s dividend? Well, management approved a 3.1p per share payout last year. And with profits set to surge in 2019, analysts are predicting a 7p dividend for 2019, rising to 10p in 2020. According to my calculations, that will leave the stock yielding 5.4% for 2020. That’s why I think this stock could be worth considering for your portfolio if it’s income you’re after. 

Turnaround complete

If CYBG isn’t for you, Balfour Beatty (LSE: BBY) also has attractive income qualities, in my opinion. 

For the past few years, this construction giant has been through a lengthy restructuring process, and it looks as if the hard work is starting to pay off. For 2018, net income hit £135m, up from a total loss of -£206m in 2015. The City is expecting more of the same in 2019. A net income figure of £151m has been plugged into their spreadsheets.

With a contract backlog of £12.6bn, up 11% year-on-year, at the end of 2018, it looks as if Balfour has plenty of scope to continue its recovery. And the group continues to pursue more opportunities to build its order backlog, such as the £1.5bn road maintenance contract with the Texas Department of Transportation, announced today. 

Dividend growth

After cutting its dividend to preserve cash as part of the turnaround plan in 2015, management reinstated the payout in 2016. And now profits have returned to healthy levels, the City reckons Balfour’s distribution will jump 31% to 6.3p in 2019, and then a further 24% to 7.8p in 2020. That’s an increase of 117% on 2017, leaving the stock yielding 3.3% next year.

This income growth, combined with its earnings recovery and attractive valuation (the stock is changing hands at a forward P/E of just 10.3), leads me to the conclusion that Balfour could be worth considering for any income portfolio. 

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Risk vs Reward 

Brexit concerns have weighed on the share prices of these two banks in recent months, and it’s easy to see why investors are haunted by the spectre of departing the EU. If the UK economy slumps after we leave at the end of March, banks will almost certainly suffer. Although it’s difficult to quantify how severe the downturn will be, it is reasonable to say OneSavings and CYBG could have to deal with higher loan loss ratios and a decline in lending.

If this is the case, then why do I think they could double your money?  It all comes down to the risk-reward ratio. These two stocks seem so undervalued that even in the worst case scenario, I reckon they will yield a positive return. And, in the best case scenario, they could double.

Undervalued 

Take OneSavings for example. Right now, shares in this £918m market-cap are trading at a forward P/E of just 6.5 — a multiple that might be acceptable if the bank was losing money or had a weak balance sheet. 

However, with a return on equity of more than 20%, it’s one of the most profitable banks in the UK, and possibly even Europe. Even if the company doesn’t grow for the next five years, in my mind this kind of profitability deserves a multiple of at least 10-12 times earnings. 

Investors will be paid to wait for a recovery as OneSavings supports a yield of 3.8%. 

City analysts believe the company can produce earnings per share of 57.9p for 2019, a multiple of 12 times earnings on this target gives a possible share price of 694.8p. That’s an upside of 85% from current levels. Add in two years’ worth of dividends (16.6p per share based on current City estimates) and investors could be in line for a total return of 95% over the next few years.

Better than expected

CYBG offers a similar potential return. Shares in this challenger bank bounced earlier in February after it lifted its forecast for margin and lending growth. Meanwhile, management is making good progress integrating Virgin Money.

This is all good news and leads me to believe that the City’s outlook for CYBG is too pessimistic. Analysts have downgraded their growth targets by around a third since October. They now expect the bank to report earnings per share of 23.3p for fiscal 2019 — that’s down from the October target of 31p. Over the next few weeks, as the City digests CYBG’s Q1 results, I reckon this target will be revised substantially higher.

Even without an earnings upgrade, CYBG looks cheap. It’s currently trading at a forward P/E of 7.6 and yields 4.5%. I reckon the company can eventually get to the City’s previous earnings target of 31p and, using this target, with a potential earnings multiple of 12, I arrive at a price of 372p. 

After adding in two years of dividends, currently 11p per share, I reckon investors buying today could see a total return of as much as 102% from CYBG over the next few years.

The post Two FTSE 250 stocks I think could double your money appeared first on The Motley Fool UK.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Of course, no one really knows what will happen. With employment levels high and interest rates low in most developed markets, the global economy may continue to steam along quite happily.

In my opinion, stock market investors should focus on companies with modest valuations and improving performance. This approach will hopefully provide a margin of safety that allows for any future bumps in the road.

An overseas opportunity

One company that should be untouched by Brexit is Asia-focused bank Standard Chartered (LSE: STAN). This £21bn group has struggled to return to growth after a difficult period caused by reckless lending and rapid expansion.

Most of these problems have now been cleared up. The bank returned to profit in 2017 and restarted dividend payments. Broker forecasts suggest that earnings per share will have risen by about 50% in 2018, with further growth expected this year.

The only remaining risk is a US investigation into the bank’s alleged breach of sanctions on Iran. It admits that the financial impact of any fines could be “substantial,” with analysts’ estimates suggesting the total figure could be around $1.5bn.

I’m a buyer

The risk of a big fine on Iran is already known by the markets. I think it’s already reflected in the price of the shares, which currently trade at a discount of around 40% to their book value.

The big challenge for chief executive Bill Winters is to improve the bank’s return on equity, a key measure of profitability for banks. Winters is targeting a return on equity of 10% after reaching 6.7% during the first half of 2018. I think it’s fair to expect further progress, even if it’s slow.

I already own shares of Standard Chartered and may buy more if this month’s full-year results show continued progress. With the stock trading on 10 times 2019 forecast earnings and offering a 3.5% yield, I continue to rate the shares as a buy.

This challenger may be too cheap

Shares in UK challenger bank CYBG (LSE: CYBG) are up by almost 15% at the time of writing, after the bank said profit margins for 2018/19 would be at the top end of expectations.

The bank — which merged with Virgin Money last year — warned in November that demand for new lending might fall. Management said that the bank’s net interest margin, a measure of profit on lending, would fall from 2.2% in 2017/18 to between 1.6% and 1.7% in 2018/19.

Better than expected

Today’s first-quarter update suggests that the current year is shaping up better than expected. Management now expect a net interest margin of 1.65-1.7% for the full year.

Demand for new mortgages and small business lending has also remained healthy. Mortgage lending rose by 1.5% to £60bn, while loans to businesses rose by 1.2% to £7.6bn. Although these figures are lower than last year, the bank’s performance seems stable.

Broker forecasts for 2019 suggest the stock is trading on about eight times forecast earnings, with a 4% dividend yield. That looks fair to me. I rate the shares as a hold.

The post Have £3k to invest? One FTSE 100 dividend stock I’d buy today appeared first on The Motley Fool UK.

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Roland Head owns shares of Standard Chartered. The Motley Fool UK has recommended Standard Chartered. 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.

Cry PPI

CYBG’s PPI nightmare completely overshadowed news of a 13% rise in underlying profit before tax to £331m over the year to September, with the bank making a statutory loss after tax of £145m (down from a profit of £182m in 2017) due to far greater than anticipated legacy PPI costs. 

Total PPI provision during 2018 was £352m plus £44m for other legacy conduct. Management said that weekly complaint volumes have been falling since the end of July but it still increased provisions by a “prudent” £150m to cover complaints before the final time bar in August 2019. This reduced the group’s common equity tier 1 ratio by around 182bps to 10.5%.

Low interest

The £3bn banking group, which recently completed its acquisition of Virgin Money, also reported a 1% rise in net interest income, while customer deposits, loans and mortgages all grew more than 4%. Underlying costs fell 6% to £635m, ahead of guidance.

Its shares have taken a beating to hit their lowest level since April 2016. CYBG now trades at 9.8 times forecast earnings, which could be a buying opportunity for those willing to see through its PPI stresses. However, although it increased its ordinary dividend to 3.1p per share, it still offers a forecast yield of just 0.8%, but is expected to hit 4.1% next year. Today could be an opportunity to go bottom fishing. However, it’s been a turnaround prospect a little too long for my liking.

Down and out

The banking sector has been tough for the big boys as well. FTSE 100 giant RBS was the biggest villain in the banking crisis and has taken longest to restore its reputation (and bottom line), as it continues to struggle to this day.

The £25bn company trades 33% lower than it did five years ago, and it wasn’t considered to be doing very well then. RBS has also been hit hard by the PPI crisis, along with just about everything else, and will be gratefully awaiting next August’s deadline (and dreading the last-minute claims rush).

Income hero

Even the news that RBS is restoring its dividend in August has failed to trigger a turnaround. Yet it is on course to be a top income stock, with a forecast yield of 3.1%, covered 4.1 times, which analysts reckon could hit 5.8% next year. That is a huge jump from zero.

RBS is trading at a tempting valuation of just 7.7 times forecast earnings, but still investors are shying away. Many were unhappy to see it report a 6.4% drop in first half operating profits to £1.83bn, even though this was made to look worse by an £801m charge for litigation and misconduct issues, double the previous year’s £396m.

Chief executive Ross McEwan has made progress but revenue growth looks sluggish-to-non-existent and the UK economy is mired in uncertainty, which hardly helps. Yet I can’t help thinking there’s an opportunity here, for the very long-sighted.

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harveyj has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Attractive-looking valuation

CYBG proposes that Virgin Money shareholders will receive 1.1297  CYBG shares for each Virgin Money share they hold if the deal goes through, which will leave them owning around 36.5% of the combined company. According to the rules of The City Code on Takeovers and Mergers, CYBG now has until 5 pm on 4 June to announce whether it will or will not make a firm offer for the business. In the meantime, Virgin Money’s directors are considering the proposal and have advised shareholders to take no action for the time being. Indeed, it could all come to nothing, or CYBG may have to put in a higher offer before Virgin’s directors are happy to recommend the proposals.

Even after today’s rise in the share price, it’s hard to make a case for Virgin Money being over-valued. At 338p, the forward price-to-earnings rating for 2019 sits at 9.7 and the forward dividend yield is around 2% with anticipated forward earnings likely to cover the payment a healthy-looking five times. The price-to-book ratio is close to 0.76. Ignoring cyclical uncertainties for a moment, Virgin Money’s valuation seems undemanding from several angles.

A good deal or assets plundered?

CYBG thinks the proposed deal will be good for Virgin Money shareholders, giving them an “attractive” premium at the beginning and the “opportunity to participate in the continuing progress of the combined group.” CYBG’s directors talk about potential synergy benefits from combining the two firms but the real prize seems to be what they call the “strength and appeal” of the Virgin Money brand, which would “play a significant role in the combined group.”

Maybe from a business perspective, this is a good idea. CYBG reckons the enlarged company would create the UK’s “leading” challenger bank offering full-service banking to 6 million personal and business customers. An organisation that size could go on to gain yet more traction in the market, winning business from the old dinosaur institutions such as Lloyds, Barclays, Royal Bank of Scotland and HSBC in Britain.

From an investing perspective, I think the situation is tricky. In the longer term, an enlarged company could do well and an investment in Virgin Money could work out well too. However, there is no certainty that any deal will go through and if it fails, the shares could slip back down again from today’s elevated level. Another possibility is that a higher offer materialises, either from CYBG or from another company, which could drive the share price even higher in the short term. Overlaying it all is the cyclicality of the banking sector, which I see as a good reason for low valuations right now. On balance, I’m cautious and would not bet the farm on Virgin Money now.

The post Should I buy shares in Virgin Money Holdings, up 8% today on takeover offer? appeared first on The Motley Fool UK.

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Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Upbeat set of results

CYBG’s profit growth was driven by an increase in mortgage and SME lending, as well an improvement on costs — the bank’s underlying cost to income ratio fell from 74% last year to a more respectable figure of 67%. Additionally, actions to reduce its cost of funding paid off, as net interest margins widened by 1 basis point to 2.27% in contrast to many of its rivals.

Nevertheless, warnings about increased competition in mortgage lending weighed heavily on its shares. The bank has only become the latest in the sector to warn about the impact of competitive market conditions, after Virgin Money last week said it expects net interest margins to decline to between 1.65% and 1.7% next year because of falling rates on new mortgages.

Inaugural dividend

However, it’s not all doom and gloom for investors as the bank proposed its first dividend since its listing in 2016. The bank recommended an inaugural dividend of 1p per share which, more than anything, is seen as a symbolic move and a vote of confidence from management in the bank’s future prospects.

“We have delivered a strong performance in 2017 having met all of our targets and recorded our first statutory profit in over five years,” commented chief executive David Duffy.

A better buy

CYBG is making good progress with its restructuring efforts, but it’s not the only bank with attractive turnaround prospects. With a price-to-tangible book value of just 0.67, I reckon Barclays (LSE: BARC) could be an even better buy.

Sure, it’s clear that Barclays doesn’t have everything going for it — the bank only recently reported painful Q3 figures, which showed another increase in PPI provisions and a drop in revenue from its UK operations. But low investor confidence and recent weak results could translate into a great contrarian opportunity.

Profits and margins aren’t nearly as crimped as they had been in the immediate aftermath of the financial crisis. And on the flip side, the bank has more room to improve returns.

Although the bank continues to face challenges caused by legacy issues, there are growing expectations that a resolution of these issues will come soon and eventually lead to a recovery in profits.

Valuations

Moreover, valuations for the Footsie giant are tempting, with shares in Barclays trading at just 11.6 times expected earnings this year. What’s more, underlying earnings is expected to rise by a further 28% next year, meaning its forward P/E on its 2018 earnings would fall to only 9.1 times.

This compares favourably to CYBG, which trades at 13.8 times its 2018 earnings, and has a price-to-tangible book value of 1.02 times.

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Jack Tang has no position in any shares mentioned. 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.

Rising profits

You won’t learn much about CYBG (LSE: CYBG) from its name. But this group is actually the holding company which owns the Clydesdale and Yorkshire Banks. It joined the market in February 2016, since when the shares have risen by 40%, outperforming the 24% gain delivered by the FTSE 250.

CYBG shares rose by 8% this morning after the group issued a strong third-quarter trading update. The group’s mortgage lending rose by 5.8% on an annualised basis during the quarter, while lending to small businesses rose 4.7% on the same basis.

Profit margins are holding firm, despite the growth in lending. Net interest margin – a key measure of lending profit – rose slightly to 2.29% during the quarter, while underlying operating costs are now expected to be £680m this year, below previous guidance of £690m-£700m.

Still good value?

CYBG’s current share price of 285p is in line with its last-reported tangible net asset value of 283.3p per share. This means that the bank’s valuation reflects no more than the theoretical break-up value of its assets.

A profitable and stable bank would normally trade at a premium to its tangible book value. I believe this is likely to happen at CYBG as the group’s profitability continues to improve.

Analysts expect underlying earnings to rise by 16% to 18.9p this year, putting the stock on a forecast P/E of 14. A maiden dividend of 3p per share is also expected, giving a 1.1% yield. I believe these shares could be a rewarding buy at current levels.

A top tech buy?

When I last wrote about price comparison business Gocompare.Com Group (LSE: GOCO), I suggested the group might be on the lookout for acquisitions to help fuel growth. Today’s interim results confirm this, reporting a “first strategic investment” in Mortgage Gym, a new mortgage-matching start-up due to launch later this year.

I view Gocompare.com as being similar to Zoopla. It’s not the market leader (Moneysupermarket.com) but it can still make a lot of money by sweeping up the remainder of the market.

Today’s interim results from Gocompare suggest to me that this view may be correct. The group’s marketing margin – a measure of adjusted operating margin – rose from 34.5% last year to 39.6% during the first half of 2017. That’s better than Moneysupermarket, whose equivalent measure fell from 34.1% to 33.4% during the first half of the year.

Average revenue per interaction rose by 2.8% to £4.43, while adjusted earnings per share rose by 14.3% to 3.2p. That’s also better than Moneysupermarket, whose adjusted earnings per share only rose by 4% during the same period.

Gocompare.com currently trades on a 2017 forecast P/E of 18, falling to a P/E of 15 for 2018. In my view, this stock still has attractive growth potential. I believe shareholders should hold on for more.

The post 2 growth stocks that could make you a millionaire appeared first on The Motley Fool UK.

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Roland Head has no position in any shares mentioned. The Motley Fool UK has recommended Moneysupermarket.com. 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.

Underlying earnings per share rose 25% to 9p as underlying profit before tax rose 15% to £123m. Underlying return on tangible equity increased to 6.3% in the first half from 4.5% in the year-ago period. The group’s common equity tier 1 capital ratio came in at 12.5% at the end of the period.

A unique business

Unlike other challenger banks, which have focused on one particular area of the market, CYBG is unique in its presence across UK personal and small business accounts. The group operates under the Clydesdale Bank, Yorkshire Bank and B brands and can offer a range of services to customers through branches, it’s online offering and brokers. And just like larger peer Lloyds, by maintaining a simple business model, focusing on the client’s experience, steady growth and capital generation, CYBG could generate huge returns for investors over the next few years.

Growth targets

Management has laid out a number of key performance targets for the banking group over the next two years. These objectives include mid-single-digit percentage annual loan book growth to both the UK retail and SME markets, a return on tangible equity in the double digits by 2019, and a tier 1 capital ratio of 12% to 13%.

This strong balance sheet will give management scope to return cash to shareholders, and that’s exactly what it plans to do with a modest inaugural dividend planned for 2017. By 2019, the payout is expected to rise to 50% of earnings. If earnings growth continues on its current trajectory, the 50% of earnings payout target could see CYBG yielding around 4.5% in two years time.

For the fiscal year ending 30 September 2017, City analysts are expecting CYBG to earn 18.2p per share rising to 21.2p per share for the following fiscal year. If the company can achieve double-digit earnings growth for the financial year ending 30 September 2019, it’s not unreasonable to suggest that for the year the company will earn around 25p per share.

Paying out of 50% of these earnings would give a dividend yield of 4.5% at current prices.

The bottom line

So, just like its larger peer Lloyds, it looks as if CYBG is on track to become an income champion over the next few years. If you want to take advantage of this, now could be the time as shares in the banking group currently trade at a relatively attractive forward earnings multiple of 15.4 falling to 13 for the year after.

Moreover, after today’s declines, the company trades at a discount to tangible net asset value. In today’s half-year update tangible net asset value was reported as being 283p per share, around 5p above the share price of 278p at the time of writing.

The post Could this challenger become the next Lloyds Banking Group plc? appeared first on The Motley Fool UK.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. 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.

The share price plummeted in the immediate aftermath of the EU referendum, but since those depths we’ve seen a 60% recovery to today’s 212.5p — and I reckon there’s a lot further to go, and that it won’t be too long before we see Barclays shares trading at above £3.

Forecasts see Barclays getting back to earnings growth this year after a rocky few years, for a forward P/E multiple of a modest 11. That would be fair for a one-off year, in which dividends are expected to return to growth but only yield 1.5%, but the longer-term future makes me think it’s too cheap.

Cracking start to the year

First, though, what about 2017? First-quarter results just out show pre-tax profit more than doubling from last year’s Q1, to £1,682m, with EPS from continuing operations up from 2.2p to 6.1p. Tangible NAV per share perked up a little, from 290p in December to 292p, which alone is way ahead of the share price.

Chief executive James E Staley said that “We are now just two months away from completing the restructuring of Barclays as a Transatlantic Consumer, Corporate and Investment Bank“, which should mark an important milestone.

Analysts are already predicting a further EPS boost for 2018, which would drop the P/E to under 9.5 and suggest a PEG of 0.5 (putting Barclays on a growth share valuation!) Dividends should be back to 3.8% by then, too.

Yes, I really do think we could see £3 before the year is out.

A new challenge

The malaise afflicting our big banks has thrown up a new kind of opportunity, too — the so-called challenger banks that have sprung up to fill the gaps in the UK retail banking business.

Today I’m looking at the cryptically named CYBG (LSE: CYBG), which consists of what used to be Clydesdale Bank and Yorkshire Bank.

CYBG is expected to start turning in solid profits this year, and to pay its first dividend. It should only yield around 1%, though there’s already a 2.5% yield pencilled in for 2018 — and it would be three times covered and could well mark the start of a progressive run.

Progressive dividend

In fact, at full-year results time for 2016, the bank told us it aims to pay out 50% of earnings as dividends — were it already doing so, the forecast 2018 yield would stand at 3.8%.

Judging by the bank’s Q1 figures, 2017 is going just fine right now, with a mortgage book up 4.4% — in a very competitive market and ahead of the wider average.

Deposit balances were up 4.7%, and new SME lending came in at £574m. With a CET1 figure of 12.8% at December, liquidity looks healthy, and full-year guidance was unchanged.

Looks like a buy to me

The shares have put on nearly 50% since flotation to today’s 282p, though they’ve fallen back a little since November’s peak at over £3, so does that provide a buying opportunity?

Looking at a P/E expected to drop to 13 by September 2018, and on my assessment of CYBG’s long-term growth potential, I think it does and I see a long-term buy here — but I do wish they’d change that name.

The post Your last chance to buy Barclays plc for under £3? appeared first on The Motley Fool UK.

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Alan Oscroft has no position in any shares mentioned. 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.