We recently published a list of 12 Most Undervalued Stocks to Invest in for Under $20. In this article, we are going to take a look at where Barclays PLC (NYSE:BCS) stands against other most undervalued stocks to invest in for under $20.
As we know, nearly all sectors in the S&P 500 index saw gains in 2024, a year dominated by AI enthusiasm and a strong US economy. According to FactSet, the S&P 500 is anticipated to report earnings growth of 11.7% for Q4 2024, marking the highest YoY growth rate reported by the index since Q4 2021. According to an update (as of January 17), the Q4 2024 earnings season for the S&P 500 has seen a strong start. FactSet added that both, the percentage of S&P 500 companies publishing positive earnings surprises and the magnitude of earnings surprises, appear to be above recent averages.
As per Morningstar, the growth drivers identified last year that supported the broader market in 2024 are now receding. The rate of monetary policy easing has been slowing, inflation has been sticky, long-term rates are increasing and the broader US economy continues to slow. Amidst these uncertainties, what lies ahead?
S&P 500 to End at 6,200-6,300 in 2025, Says Goldman
Goldman Sachs’ investment strategy group anticipates the S&P 500 to end between 6,200-6,300 by year-end, demonstrating a total return of ~7% – 8%. The companies’ earnings growth is expected to be the critical driver of the S&P 500’s 2025 return, and Goldman forecasts that the index’s EPS will increase by ~10% to $265 this year. When this earnings growth gets combined with a 1.3% dividend yield and some sort of compression in the P/E ratio, the firm’s base case this year demonstrates high-single-digit total returns and the S&P 500 target range of 6,200 – 6,300.
What to Expect in 2025?
As per Goldman Sachs, the US stocks have faced pressures as of now in January, due to factors including higher Treasury bond yields, after strong performance in 2024 pushed S&P 500 index at elevated valuations. As per the group, the yield on the 10-Y treasury note is expected to conclude the year lower compared to the current level. The firm recommends to remain invested in the US stock market, even though the broader market is historically expensive.
As per Goldman, the US stock market often delivers gains when there are economic expansions. The investment strategy group of the bank has placed 80% odds on the fact that the US economy will continue to expand in the current year. While the elevated valuation can expose the market to downside risks, the investment firm believes that the US equities will outperform intermediate-duration U.S. bonds and cash considering its economic growth forecast of 2.3%.
Our Methodology
To list the 12 Most Undervalued Stocks to Invest in for Under $20, we used a screener to find stocks that are under $20 and have a forward P/E of less than 15x, as of January 17. We also mentioned hedge fund sentiment around each stock, as of Q3 2024. The stocks were ranked in ascending order of their hedge fund sentiment.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An investor looking at a stock chart, representing the bank’s securities dealing.
Barclays PLC (NYSE:BCS)
Forward P/E as of January 17: 7.04x
Share Price as of January 17: $14.26
Number of Hedge Fund Holders: 21
Barclays PLC (NYSE:BCS) offers various financial services in the UK, Europe, the Americas, Africa, the Middle East, and Asia. The company can allocate additional resources to areas demonstrating strong potential, like investment banking, wealth management, or fintech partnerships. By capitalizing on the strong performance in Q3 2024, it can focus on talent acquisition, technology upgrades, and market expansion in these lucrative segments. Furthermore, Barclays PLC (NYSE:BCS)’s strong performance is expected to provide financial flexibility to pursue strategic acquisitions or partnerships.
The company informed that Barclays Bank UK PLC has completed the acquisition of the retail banking business of Tesco Personal Finance plc. This acquisition forms an important step in increasing Barclays PLC (NYSE:BCS)’s investment in the UK. Through the acquisition of Tesco Bank’s credit cards, unsecured personal loans, and deposits, Barclays PLC (NYSE:BCS) will have access to Tesco’s extensive customer network, which can enhance its market presence in the UK.
Integration of Tesco Bank’s offerings will diversify Barclays PLC (NYSE:BCS)’s product range, resulting in cross-selling opportunities and meeting the broader spectrum of customer needs. In conjunction with the completion of the acquisition, Barclays UK has entered into a long-term, exclusive strategic partnership with Tesco Stores Limited for an initial period of 10 years. This will allow the former to market and distribute financial products under the Tesco brand, leveraging Tesco’s strong retail reputation.
Overall, BCS ranks 12th on our list of most undervalued stocks to invest in for under $20. While we acknowledge the potential of BCS as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than BCS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
