- Some momentum stocks still aren't expensive
- Others are quality compounders with tailwinds
Barclays (BARC) tops our UK large-cap earnings upgrade momentum screen. Analysts have raised their expectations of earnings per share for the full years ending December 2024 and December 2025 by an average of 11 per cent compared to their views one year ago. The improving sentiment has in part been driven by better performance reported at the mid-year stage by Barclays’ investment banking arm. There is of course great uncertainty for the world economy in the coming months, especially if president-elect Trump’s policies prove inflationary and increase the chance of a no-landing scenario (higher interest rates for longer).
In Britain the jury is out on the chancellor’s budget and if controversial energy policies and an unaccommodating stance towards farmers comes back to bite, inflation could well be a theme into the second half of the decade. For banks that’s a mixed bag, as the inevitable higher rates are an opportunity to maintain a wider margin on lending, but then fewer loans get written. Nonetheless, valued at just six and a half times next twelve months’ expected earnings per share, Barclays shares still offer a decent risk premium.
