For many investors, there is not a great deal to look forward to at the present time. The Chinese economic growth rate is slowing, problems in the Eurozone are still ongoing and the prospect of interest rate rises in the US could act as a brake on the performance of the FTSE 100 in the coming months. As such, it is understandable for investors to be looking ahead to 2016 with at least a tinge of doubt and, in some cases, dread.
However, for Barclays (LSE: BARC), the opposite is true. That’s because it has a great deal to look forward to and, crucially, there are a number of key catalysts which could act as a positive influence on its future share price performance.
For example, Barclays is due to appoint a new CEO next year, with it being extremely patient in terms of ensuring it finds the right person to lead the bank. There are various rumours as to who the new man/woman will be, but it seems clear that Barclays could benefit from a refreshed strategy, which has the potential to positively impact investor sentiment in future. Even something as simple as setting a new target regarding dividend payouts could cause the market to view Barclays as not only a more impressive income play, but also highlight the confidence which its management has in the bank’s future prospects.
In addition, Barclays can also look forward to the end of PPI claims. The FCA announced recently that a deadline may be set within the next couple of years which would mean no further claims could be brought against banks such as Barclays. Not only does this have the potential to put to bed the seemingly endless provisions which have been made in recent years, it also has the scope to improve investor sentiment in the banking sector in the coming years.
Meanwhile, Barclays is also due to report rapidly improving earnings numbers, which should help to boost the company’s share price. For example, it is forecast to post a rise in its bottom line of 33% in the current year, followed by further growth of 21% next year. This is a far higher rate of growth than the majority of its banking peers are forecasting (challenger banks aside) and if Barclays is able to deliver on these numbers then it puts the bank’s shares on a forward price to earnings (P/E) ratio of just 9. This indicates that share price growth lies ahead.
Furthermore, Barclays is expected to rapidly increase its dividend in future years, with a rise of 38% being anticipated between 2014 and 2016 on a per share basis. After the bank’s disappointing recent share price performance of late, it means that it trades on a forward yield of 3.6% from a payout ratio of just 32%. This indicates that Barclays has the scope to become a strong dividend play in the medium term.
So, while many investors are feeling downbeat at the moment, Barclays has a lot to look forward to, including the appointment of a new CEO, an end to PPI claims, improving financial performance and rising dividends. As such, now seems to be a great time to buy a slice of the bank.