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After a few hard months for… FTSE100 I see a lot of low-cost stocks that I want to buy right now. This is great news because low-cost stocks are my favorite type of stock.
At the top of the list is Barclays (LSE:BARC). I am surprised that the bank has a price-to-earnings ratio (P/E) of only 9.2. This is well below the FTSE 100 average of 14.2 times.
I expected it to be much more high-priced considering the Barclays share price has increased by 79.17% in the last 12 months.
Can the Barclays share price continue to rise?
Big banks have performed well this year, but Barclays has gained additional strength from exposure to the United States through its investment banking division. He may therefore benefit from Trump’s trade.
Moreover, he appears to have minimal exposure to the automotive finance scandal. This is a stark contrast to its FTSE 100 rival Lloyds Banking Groupwhose shares consequently lost their value.
Barclays may also benefit from the growing feeling that interest rates will remain higher for longer. This will enable banks to maintain their net interest margin, which is the difference between what they pay to savers and what they pay to borrowers.
Business continues to flourish. On October 24, Barclays reported a pre-tax profit of £2.2 billion in the third quarter, up from £1.9 billion a year earlier.
Banking will always be risky, especially given today’s economic and geopolitical concerns, especially in the domestic UK market. Barclays’ dividend yield dropped to 3.31%, which is low. My biggest concern is that she shares my inaction or even withdrawal after their stellar run. Regardless, I plan to buy it as soon as I have the money.
Man, National Grid stock looks low-cost
Gear giant National Network (LSE: NG) may not look stunningly low-cost with a P/E ratio of 11.76 times, but I was personally surprised. I got used to trading at 15 or 16 times earnings almost every time I looked. That’s what fair value is.
I have always based its stable valuation on the fact that National Grid is a natural monopoly with regulated revenues, so investors basically knew what they were getting.
On the radiant side, it’s been a fun year for National Grid. The company’s share price fell in May after its board announced a £7 billion rights issue to support £60 billion of capital investment over the next five years. That’s not what investors expect from this stock. However, the price rebounded quite sharply as investors took the opportunity to replenish their holdings at a reduced price.
It has fallen 3.91% over the past month after management announced a 50% drop in pre-tax profits to £684m on November 7. However, underlying profits rose 26% to £1.43 billion. Over the past 12 months, the National Grid share price has increased by a modest 5.84%.
The yield is 5.8%, giving you a solid total return. I admit to being concerned about National Grid’s £43.6 billion net debt and infrastructure investment requirements. But if I don’t buy the stock at today’s discount price, I never will.