Barclays (BARC) & Legal and General (LGEN): Should you hold these 2 stocks?

Highlights

  • Barclays and US venture fund Anthemis announced the expansion of their female innovator’s lab into the EU and UK.
  • Legal and General entered into a buy-in the transaction with coffee leader Selecta UK’s pension system in a deal worth up to £250 million.

The UK markets fears eased after a volatile start of the week on investors’ concern about the heavily indebted Chinese property developer Evergrande.

The blue-chip index FTSE 100 has extended gains for the second consecutive day, shrugging off losses from earlier this week. The FTSE 100 index was trading at 7,062.83, up by 1.17 per cent today at 11:27 AM BST.

Global markets had witnessed a sharp sell-off on Monday triggered by concerns of how deeply Evergrande’s debt crises could affect other nations.

However, strategists at banking firms Barclays (LON: BARC), Citigroup and UBS Group have said that Evergrande’s ongoing debt crisis is unlikely to be similar to the crash of erstwhile investment bank Lehman Brothers in the US, due to low default levels compared to China’s economy size.

Let us take a look at 2 FTSE 100 stocks that are considered long term picks:  

Barclays PLC (LON: BARC)

Barclays is a UK based banking major. The bank, along with its US based venture fund Anthemis announced on Tuesday that the Female innovators lab, a woman in fintech focused entrepreneurial talent studio, will be expanded to Europe and UK.

The studio lab is aimed at improving gender diversity in the fintech sector.

Earlier, Barclays had reported its H1 2021 results; the company posted a profit before tax of £5.0 billion, compared to £1.3 billion in H1 2020.

Also, the group estimates to have a return on tangible equity (RoTE) of 10 per cent in FY 2021.

Barclays share price performance

(Image Source: Refinitiv)

Barclays’ shares were trading at GBX 180.18, up by 2.95 per cent today at 11:26 AM BST, while the banking sectoral index was trading at 2,702.98, up by 3.25 per cent.

Barclays’ market cap is at £29,525.12 million, and its one-year return stands at 95.53 per cent as of Wednesday.

Its 1 year forward P/E ratio is estimated at 6.552x compared to an industry median of 10.15x, according to Refinitiv data.

Legal & General Group PLC (LON: LGEN)

Legal and General Group is a UK based financial services company focused on life assurance, mortgages, pensions and other products.

The group entered into a buy-in transaction agreement with Selecta UK pension worth £250 million today. Selecta UK is a leading coffee and vending machine operator in Europe.

Legal and General Group’s share price performance

(Image Source: Refinitiv)

Legal and General’s shares were trading at GBX 279.40, up by 2.91 per cent today at 12:16 PM BST, while the life insurance sectoral index was trading at 7,887.34, up by 2.77 per cent.

The company’s market cap is at £16,208.53 million, and its one-year return stands at 54.31 per cent as of Wednesday.

Its 1 year forward P/E ratio is estimated at 8.42x compared to an industry median of 14.65x, according to Refinitiv data.

Also, its one-year forward dividend yield is projected at 7.01 per cent, compared to an industry median of 3.63 per cent.

Bottom Line

FTSE 100 stocks are considered to be relatively more stable and mature stocks and are typically considered a viable investment choice due to having a long financial performance history.

LGEN has solid financial history and recent performance. The company reported a rise of 14 per cent in its H1 2021 operating profit.  Similarly, Barclays also reported strong H1 2021 profit before tax growth, which led to its RoTE to rise to 16.4 per cent, from 2.9 per cent in H1 2020.   

However, both of these stocks face competition from their respective life insurance and banking sectors that could affect their future profitability and revenues.

Therefore, blue-chip investors can choose to continue to hold on to these stocks but should still keep an eye out on the individual stocks’ sectoral megatrends as well as the economic impact on the market.

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