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During the last month, the FTSE 100 has fallen 2.5%. But Barclays (LSE:BARC) share price has fallen around 10% over the same period, making it one of the worst performers on the index.
The stock has been going through some tough times lately. But I’m still following it closely because it’s close to a price where I might be interested in buying it.
Different from their peers
Overall, the UK banking sector has been under pressure lately. I think that makes this a good place to look for stocks to buy and Barclays stands out to me for a few reasons.
The company differentiates itself from its FTSE 100 peers. Where Lloyd’s and NatWest They make most of their money from consumer loans, this only represents 25% of Barclays’ total revenue.
In addition to a strong credit card business, the company also has a significant investment banking operation. This is a major difference from other UK banks.
Lower exposure to consumer loans means the company hasn’t benefited from higher interest rates like others have. And global investment banking has gone through a cyclical downturn.
As a result, Barclays has faced headwinds that its peers have not. That makes it a poor choice for potential investors for the near future, but I think the long-term prospects are much brighter.
Long-term investment
There are a couple of signs that a recovery in investment banking activity may not be that far away. One is the fact that interest rates have stopped rising in both the UK and the US.
Another is for companies to begin trading again on public markets. There have been a few of these in 2023, indicating that IPO activity could be picking up again.
I’m glad to see the company doing well, but I don’t want the price to go up too much too fast. Barclays is on the list of stocks I follow closely and I would like to be able to buy them at a better price.
As a long-term investor, buying at lower prices should lead to better returns in the long run.
A lower share price also means a better dividend yield. That’s another reason to expect Barclays’ share price to fall.
An action to consider?
I think Barclays has a unique position among FTSE 100 banks. Its investment banking operations currently look like a drag on profits, but could well be beneficial in the future.
Investing well often involves buying stocks when they are no longer in fashion. And this is definitely true for Barclays right now.
The company has not benefited from rising interest rates as other UK banks have. But its long-term profitability potential should not be underestimated.
