Big bank stocks ‘scream cheap’ ahead of results

Edited by Jamie Nimmo

ANALYSTS reckon share prices of many big banks could be on the verge of a hefty jump.

Ahead of a spate of company results this week, one analyst says bank stocks look ‘outrageously cheap’.

Ian Gordon, banking analyst at Investec, said Barclays, Lloyds and Royal Bank of Scotland – all of which are set to post third-quarter numbers – were likely to produce ‘relatively clean’ figures, marginally ahead of the market’s expectations.

Shares in Barclays and Lloyds are trading near two-year lows. Some experts believe this is odd considering that the sector has avoided the profit warnings that have hit the retail industry.

‘On any conventional measure, bank stocks scream “cheap”,’ Gordon said. Yet he concedes that banks are not immune from the nervousness about the impact of Brexit. ‘The political noise is unhelpful,’ he added.

And, a decade on since the crash, banks still have skeletons in the closet. For instance, some people expect Lloyds to book another provision for missold PPI, perhaps up to £200 million. A rush of claims is expected ahead of next August’s deadline.

TALKING of bad manners, Nelson Peltz also refused to return calls about an interest in hotel and restaurant firm Whitbread.

Peltz, one of America’s most feared billionaire activist i nvestors, has launched Trian, a Londonlisted vehicle, to target a European firm, possibly one in the Footsie.

Peltz’s son, Matthew, is understood to have flown to the UK to do some ‘research’ on Whitbread.

Peltz Junior stayed a few nights in a Premier Inn, Whitbread’s hotel chain, gossips told the Betaville blog, and claim he found the experience so gruesome he advised his father to look for a new target.

ITS share price has been falling for months and now analysts describe Joules as undervalued at 260.5.

Broker Liberum Capital calls the British clothing and homewear retailer’s 21 per cent slide since July ‘unwarranted’, saying nothing had changed since the full-year results. It added that Joules’ strong online and wholesale arms are likely to protect it from high street woes.

The retailer was praised for its wide range of products, meaning it isn’t overly reliant on a few big sellers, and is said to be cool enough to weather changes in fickle fashion trends.

The company, which listed on Aim in 2016, now has 123 stores, more than a million customers and is expanding into the US.