Why I’d Buy Barclays PLC Instead Of Moneysupermarket.Com Group PLC And Henderson Group Plc

These 2 stocks do not hold the same long term appeal as Barclays PLC (LON: BARC): Moneysupermarket.Com Group PLC (LON: MONY) and Henderson Group Plc (LON: HGG)

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Shares in price comparison website Moneysupermarket.Com (LSE: MONY) and wealth manager Henderson (LSE: HGG) are up modestly today after both companies posted encouraging results.

In the case of Moneysupermarket.Com, the key takeaway is that it expects full year profitability to be slightly ahead of previous guidance, with a strong first half of the year delivering increased profitability. In fact, Moneysupermarket.Com delivered a rise in net profit of £9m, with it reaching £30m in the first half of the year versus £21m in the same period last year. As such, its shares are up around 1.5% at the time of writing.

Meanwhile, Henderson saw its assets under management rise by 10% versus the first half of 2014, with net inflows of £5.6bn being a major positive for the company. And, with its underlying pretax profit from continuing operations soaring to £117m from £90m in the first half of last year, it appears to be moving in the right direction. As such, a £25m share buyback is to be initiated in the second half of the current year, with Henderson’s shares now trading 27% higher than they were at the turn of the year.

Should you invest £1,000 in Barclays right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Barclays made the list?

See the 6 stocks

Despite their encouraging financial performance, though, there are a number of stocks that I would purchase before Moneysupermarket.Com and Henderson. In the case of Moneysupermarket.Com, the reason for that is the company’s valuation. Certainly, today’s improved guidance is highly encouraging for investors and shows that, while saving money may not be quite as important to individuals as it was a year ago (due to increasing incomes in real-terms), it is still able to increase profit at a brisk pace. However, this already seems to be more than adequately accounted for by the company’s valuation, with it trading on a very high price to earnings growth (PEG) ratio of 2.9.

Of course, Henderson offers excellent value for money at the present time. It trades on a PEG ratio of just 0.9 and, with management appearing to have considerable confidence in the company’s future prospects (as evidenced by the initiation of a share buyback programme), now could be a great time to buy a slice of it. That’s especially the case since Henderson is expected to yield as much as 4.1% next year.

However, even though Henderson is appealing, Barclays (LSE: BARC) is much more attractive at the present time. For starters, it is incredibly cheap despite having an excellent track record of profitability – especially when it is considered just how challenging recent years have been for the banking sector. For example, Barclays has been profitable throughout the credit crunch and even though it is due to deliver double-digit earnings growth in each of the next two years, it trades on a PEG ratio of just 0.5. This indicates that its shares are hugely undervalued and offer superb capital gain potential.

Looking ahead, Barclays may be without a permanent CEO for some time. However, it has a strong management team and, as such, investor sentiment is unlikely to be hurt by this fact. And, with Barclays set to yield as much as 3.7% next year, it is quickly becoming a very appealing income stock that is set to deliver stunning total returns in the long run.

5 stocks for trying to build wealth after 50

The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.

Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

Claim your free copy now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of Barclays. The Motley Fool UK has recommended Barclays and Moneysupermarket.com. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

As gold hits $3,000, this FTSE 100 stock is primed for blast off

As Western institutions scramble to get as much gold as they can lay their hands on, Andrew Mackie believes this…

Read more »

British Isles on nautical map
Investing Articles

1 FTSE 100 stock I’ve been buying this week

The S&P 500 might be falling, but Stephen Wright has been taking advantage of an opportunity in a FTSE 100…

Read more »

Investing Articles

How to optimise an ISA and target a £2k monthly second income

Mark Hartley considers the potential benefits of various ISA products and outlines a strategy that could lead to a lucrative…

Read more »

Buffett at the BRK AGM
Investing Articles

How Warren Buffett continues to make the cash register ring like church bells!

I've been reading Warren Buffett’s latest letter to Berkshire Hathaway shareholders. As ever, it contains some great advice.

Read more »

Investing Articles

3 growth stocks for investors to add to their watchlists

When things get choppy in the stock market, share prices can fall dramatically. And this can be especially true of…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

5 US stocks making investors richer in 2025!

These five US stocks have doubled investors’ money in just 12 months! But can these gains continue throughout the rest…

Read more »

Frustrated young white male looking disconsolate while sat on his sofa holding a beer
Investing Articles

These 5 UK shares have made most investors poorer… for now

In the last six months, these five UK shares have crippled investment portfolios with losses of 40%-68%! But are these…

Read more »

Investing Articles

3 tempting growth stocks to consider before the Stocks and Shares ISA deadline

I’m looking to make the most of this year’s Stocks and Shares ISA allowance before the 5 April deadline. Here…

Read more »