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Jan. 13, 2021, 10:41 a.m. EST

Under-owned and cheap: Why Barclays has turned more bullish on U.K. stocks

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By Barbara Kollmeyer

While treading water on Wednesday, the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.31% has had an impressive performance in 2021 thus far, as investors have shifted into companies that could prosper while COVID-19 vaccines drive economic recoveries.

The index /zigman2/quotes/210598409/delayed UK:UKX -0.31% is up 4.5% for the year, versus a 2.6% rise for the Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP -0.78% and 1.3% for the S&P 500 /zigman2/quotes/210599714/realtime SPX +1.95% .

Those so-called value plays, such as mining and energy stocks, are heavily represented on the U.K. index. Heavyweights BP /zigman2/quotes/202286639/delayed UK:BP +1.82% /zigman2/quotes/207305210/composite BP +2.84% , Royal Dutch Shell /zigman2/quotes/206428183/delayed UK:RDSA +1.68% /zigman2/quotes/205095589/composite RDS.A +3.35% and Anglo American /zigman2/quotes/201381512/delayed UK:AAL +0.92% /zigman2/quotes/201381512/delayed UK:AAL +0.92% have all seen double-digit gains for the few days of trading in 2021 so far.

A “cheap reflation play, with a defensive hedge,” is how strategists at Barclays describe U.K. equities right now, as they upgraded the asset class to neutral or marketweight, “after an awful 2020,” in a note to clients on Wednesday.

“Defensive sector weights make the U.K. an unlikely outperformer, but provide a hedge. Brexit will hit GDP for years to come and U.K.’s COVID outcome is amongst the worst, but consequently it could see a bigger activity rebound if vaccines succeed,” said a team led by Emmanuel Cau.

“Global PMs [portfolio managers] have shied away from U.K. exposure over the last four years. This was mostly due to the binary tail risk of a ‘crash-out’ outweighing the attractiveness of U.K. assets, but also because tech/growth-heavy indexes were the only place to be,” said the strategists. “The U.K. is relatively cheap and under-owned but this has begun to reverse, with domestic plays and GBP seeing a bid lately. “

As for the sectors they like, the strategists highlight commodities, financials, industrials and discretionary stocks, and say avoid health care, staples, telecoms and real estate.

Their overweighted stocks include energy giant BP /zigman2/quotes/207305210/composite BP +2.84% /zigman2/quotes/202286639/delayed UK:BP +1.82% , miner Anglo American /zigman2/quotes/201381512/delayed UK:AAL +0.92% , mining equipment group Weir /zigman2/quotes/201865002/delayed UK:WEIR -1.35% , outsourcing group Serco /zigman2/quotes/202143031/delayed UK:SRP -1.85% , low-cost airline Wizz Air /zigman2/quotes/210449062/delayed UK:WIZZ -5.47% , home builder Redrow /zigman2/quotes/206663416/delayed UK:RDW -0.25% , catering group SSP /zigman2/quotes/205370875/delayed UK:SSPG -1.98% , bakery chain Greggs /zigman2/quotes/205743109/delayed UK:GRG -2.42% , antivirus software group Avast /zigman2/quotes/203787462/delayed UK:AVST -1.59% , global advertising group WPP /zigman2/quotes/202300097/delayed UK:WPP -0.20% /zigman2/quotes/203813176/composite WPP +2.31% , direct marketer 4imprint Group /zigman2/quotes/207133667/delayed UK:FOUR -1.97% , telecom BT /zigman2/quotes/209006687/delayed UK:BT.A +4.93% , drug company AstraZeneca /zigman2/quotes/200304487/composite AZN +1.76% /zigman2/quotes/203048482/delayed UK:AZN +0.01% , medical products and technologies company ConvaTec /zigman2/quotes/204036468/delayed UK:CTEC +3.02% , grocer Tesco /zigman2/quotes/203761082/delayed UK:TSCO +2.14% , tobacco giant Imperial Brands /zigman2/quotes/208789104/delayed UK:IMB +0.43% , consumer-goods group Unilever /zigman2/quotes/204685760/composite UL +1.01% /zigman2/quotes/205449809/delayed UK:ULVR +0.96% , electricity and gas manager National Grid /zigman2/quotes/208805676/delayed UK:NG -0.14% /zigman2/quotes/204048449/composite NGG +0.49% , Lloyds Banking Group /zigman2/quotes/200709414/composite LYG +1.82% /zigman2/quotes/202285510/delayed UK:LLOY -0.67% , Legal & General /zigman2/quotes/201125471/delayed UK:LGEN -0.92% , private equity and venture capital group 3i /zigman2/quotes/202254899/delayed UK:III -0.39% and property investment and development group Segro /zigman2/quotes/205428601/delayed UK:SGRO -3.03% .

/zigman2/quotes/210598409/delayed
UK : FTSE UK
6,630.52
-20.36 -0.31%
Volume: 997,627
March 5, 2021 4:59p
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/zigman2/quotes/210598409/delayed
UK : FTSE UK
6,630.52
-20.36 -0.31%
Volume: 997,627
March 5, 2021 4:59p
loading...
/zigman2/quotes/210599654/delayed
XX : STOXX
408.68
-3.23 -0.78%
Volume: 0.00
March 5, 2021 11:03p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
3,841.94
+73.47 +1.95%
Volume: 3.33B
March 5, 2021 5:44p
loading...
/zigman2/quotes/202286639/delayed
UK : U.K.: London
318.80 p
+5.70 +1.82%
Volume: 74.81M
March 5, 2021 4:35p
P/E Ratio
N/A
Dividend Yield
4.77%
Market Cap
£63.20 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/207305210/composite
US : U.S.: NYSE
$ 26.77
+0.74 +2.84%
Volume: 21.17M
March 5, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
5.81%
Market Cap
$88.43 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/206428183/delayed
UK : U.K.: London
£ 1,548.40
+25.60 +1.68%
Volume: 9.02M
March 5, 2021 4:35p
P/E Ratio
N/A
Dividend Yield
0.03%
Market Cap
£116.45 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/205095589/composite
US : U.S.: NYSE
$ 43.85
+1.42 +3.35%
Volume: 6.87M
March 5, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
2.53%
Market Cap
$162.92 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/201381512/delayed
UK : U.K.: London
2,913.50 p
+26.50 +0.92%
Volume: 3.31M
March 5, 2021 4:35p
P/E Ratio
22.63
Dividend Yield
2.48%
Market Cap
£35.63 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/201381512/delayed
UK : U.K.: London
2,913.50 p
+26.50 +0.92%
Volume: 3.31M
March 5, 2021 4:35p
P/E Ratio
22.63
Dividend Yield
2.48%
Market Cap
£35.63 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/207305210/composite
US : U.S.: NYSE
$ 26.77
+0.74 +2.84%
Volume: 21.17M
March 5, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
5.81%
Market Cap
$88.43 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/202286639/delayed
UK : U.K.: London
318.80 p
+5.70 +1.82%
Volume: 74.81M
March 5, 2021 4:35p
P/E Ratio
N/A
Dividend Yield
4.77%
Market Cap
£63.20 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/201381512/delayed
UK : U.K.: London
2,913.50 p
+26.50 +0.92%
Volume: 3.31M
March 5, 2021 4:35p
P/E Ratio
22.63
Dividend Yield
2.48%
Market Cap
£35.63 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/201865002/delayed
UK : U.K.: London
1,789.50 p
-24.50 -1.35%
Volume: 717,924
March 5, 2021 4:35p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
£4.71 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/202143031/delayed
UK : U.K.: London
127.60 p
-2.40 -1.85%
Volume: 2.52M
March 5, 2021 4:35p
P/E Ratio
11.81
Dividend Yield
1.10%
Market Cap
£1.58 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/210449062/delayed
UK : U.K.: London
4,996.00 p
-289.00 -5.47%
Volume: 261,276
March 5, 2021 4:35p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
£5.44 billion
Rev. per Employee
£455,811
loading...
/zigman2/quotes/206663416/delayed
UK : U.K.: London
595.00 p
-1.50 -0.25%
Volume: 1.33M
March 5, 2021 4:35p
P/E Ratio
16.25
Dividend Yield
1.01%
Market Cap
£2.05 billion
Rev. per Employee
£559,783
loading...
/zigman2/quotes/205370875/delayed
UK : U.K.: London
346.40 p
-7.00 -1.98%
Volume: 1.07M
March 5, 2021 4:35p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
£1.90 billion
Rev. per Employee
£65,745
loading...
/zigman2/quotes/205743109/delayed
UK : U.K.: London
2,098.00 p
-52.00 -2.42%
Volume: 232,873
March 5, 2021 4:35p
P/E Ratio
668.15
Dividend Yield
0.00%
Market Cap
£2.18 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/203787462/delayed
UK : U.K.: London
446.00 p
-7.20 -1.59%
Volume: 2.45M
March 5, 2021 4:35p
P/E Ratio
34.95
Dividend Yield
2.60%
Market Cap
£4.66 billion
Rev. per Employee
£392,280
loading...
/zigman2/quotes/202300097/delayed
UK : U.K.: London
888.20 p
-1.80 -0.20%
Volume: 2.64M
March 5, 2021 4:35p
P/E Ratio
N/A
Dividend Yield
1.13%
Market Cap
£10.19 billion
Rev. per Employee
£123,931
loading...
/zigman2/quotes/203813176/composite
US : U.S.: NYSE
$ 62.55
+1.41 +2.31%
Volume: 107,416
March 5, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
1.04%
Market Cap
$14.26 billion
Rev. per Employee
$158,104
loading...
/zigman2/quotes/207133667/delayed
UK : U.K.: London
2,490.00 p
-50.00 -1.97%
Volume: 23,798
March 5, 2021 4:35p
P/E Ratio
32.20
Dividend Yield
0.00%
Market Cap
£713.37 million
Rev. per Employee
N/A
loading...
/zigman2/quotes/209006687/delayed
UK : U.K.: London
141.45 p
+6.65 +4.93%
Volume: 44.85M
March 5, 2021 4:40p
P/E Ratio
9.32
Dividend Yield
0.00%
Market Cap
£13.36 billion
Rev. per Employee
£216,629
loading...
/zigman2/quotes/200304487/composite
US : U.S.: Nasdaq
$ 48.06
+0.83 +1.76%
Volume: 11.17M
March 5, 2021 4:00p
P/E Ratio
39.21
Dividend Yield
2.85%
Market Cap
$125.94 billion
Rev. per Employee
$352,484
loading...
/zigman2/quotes/203048482/delayed
UK : U.K.: London
6,858.00 p
+1.00 +0.01%
Volume: 2.42M
March 5, 2021 4:35p
P/E Ratio
36.20
Dividend Yield
3.02%
Market Cap
£90.01 billion
Rev. per Employee
£272,751
loading...
/zigman2/quotes/204036468/delayed
UK : U.K.: London
194.50 p
+5.70 +3.02%
Volume: 5.64M
March 5, 2021 4:35p
P/E Ratio
44.41
Dividend Yield
2.13%
Market Cap
£3.78 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/203761082/delayed
UK : U.K.: London
224.00 p
+4.70 +2.14%
Volume: 22.74M
March 5, 2021 4:35p
P/E Ratio
15.62
Dividend Yield
5.49%
Market Cap
£16.83 billion
Rev. per Employee
£157,770
loading...
/zigman2/quotes/208789104/delayed
UK : U.K.: London
1,392.50 p
+6.00 +0.43%
Volume: 1.70M
March 5, 2021 4:35p
P/E Ratio
8.81
Dividend Yield
9.89%
Market Cap
£13.12 billion
Rev. per Employee
£511,385
loading...
/zigman2/quotes/204685760/composite
US : U.S.: NYSE
$ 54.02
+0.54 +1.01%
Volume: 2.62M
March 5, 2021 4:00p
P/E Ratio
22.47
Dividend Yield
3.39%
Market Cap
$141.54 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/205449809/delayed
UK : U.K.: London
3,891.00 p
+37.00 +0.96%
Volume: 4.33M
March 5, 2021 4:35p
P/E Ratio
20.70
Dividend Yield
3.81%
Market Cap
£101.17 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/208805676/delayed
UK : U.K.: London
828.00 p
-1.20 -0.14%
Volume: 4.98M
March 5, 2021 4:35p
P/E Ratio
19.89
Dividend Yield
5.92%
Market Cap
£29.43 billion
Rev. per Employee
£630,283
loading...
/zigman2/quotes/204048449/composite
US : U.S.: NYSE
$ 57.63
+0.28 +0.49%
Volume: 428,629
March 5, 2021 4:00p
P/E Ratio
21.71
Dividend Yield
5.40%
Market Cap
$41.18 billion
Rev. per Employee
$800,398
loading...
/zigman2/quotes/200709414/composite
US : U.S.: NYSE
$ 2.24
+0.04 +1.82%
Volume: 9.46M
March 5, 2021 4:00p
P/E Ratio
35.00
Dividend Yield
1.42%
Market Cap
$39.98 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/202285510/delayed
UK : U.K.: London
40.08 p
-0.27 -0.67%
Volume: 276.01M
March 5, 2021 4:35p
P/E Ratio
33.12
Dividend Yield
1.42%
Market Cap
£28.58 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/201125471/delayed
UK : U.K.: London
278.90 p
-2.60 -0.92%
Volume: 15.17M
March 5, 2021 4:35p
P/E Ratio
13.47
Dividend Yield
6.30%
Market Cap
£16.71 billion
Rev. per Employee
£6.08M
loading...
/zigman2/quotes/202254899/delayed
UK : U.K.: London
1,135.50 p
-4.50 -0.39%
Volume: 1.63M
March 5, 2021 4:35p
P/E Ratio
15.41
Dividend Yield
3.08%
Market Cap
£10.99 billion
Rev. per Employee
£624,113
loading...
/zigman2/quotes/205428601/delayed
UK : U.K.: London
875.80 p
-27.40 -3.03%
Volume: 3.23M
March 5, 2021 4:35p
P/E Ratio
7.24
Dividend Yield
2.52%
Market Cap
£10.76 billion
Rev. per Employee
N/A
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