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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 -1.20% 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 -1.20% is up 4.5% for the year, versus a 2.6% rise for the Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP -1.84% and 1.3% for the S&P 500 /zigman2/quotes/210599714/realtime SPX -1.89% .

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 -1.77% /zigman2/quotes/207305210/composite BP -2.07% , Royal Dutch Shell /zigman2/quotes/206428183/delayed UK:RDSA -1.69% /zigman2/quotes/205095589/composite RDS.A -1.70% and Anglo American /zigman2/quotes/201381512/delayed UK:AAL -2.70% /zigman2/quotes/201381512/delayed UK:AAL -2.70% 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 -2.07% /zigman2/quotes/202286639/delayed UK:BP -1.77% , miner Anglo American /zigman2/quotes/201381512/delayed UK:AAL -2.70% , mining equipment group Weir /zigman2/quotes/201865002/delayed UK:WEIR -3.62% , outsourcing group Serco /zigman2/quotes/202143031/delayed UK:SRP -0.88% , low-cost airline Wizz Air /zigman2/quotes/210449062/delayed UK:WIZZ -2.63% , home builder Redrow /zigman2/quotes/206663416/delayed UK:RDW -0.47% , catering group SSP /zigman2/quotes/205370875/delayed UK:SSPG -1.06% , bakery chain Greggs /zigman2/quotes/205743109/delayed UK:GRG -0.79% , antivirus software group Avast /zigman2/quotes/203787462/delayed UK:AVST +0.20% , global advertising group WPP /zigman2/quotes/202300097/delayed UK:WPP -1.24% /zigman2/quotes/203813176/composite WPP -1.41% , direct marketer 4imprint Group /zigman2/quotes/207133667/delayed UK:FOUR +1.71% , telecom BT /zigman2/quotes/209006687/delayed UK:BT.A -0.40% , drug company AstraZeneca /zigman2/quotes/200304487/composite AZN -1.78% /zigman2/quotes/203048482/delayed UK:AZN -1.02% , medical products and technologies company ConvaTec /zigman2/quotes/204036468/delayed UK:CTEC -4.90% , grocer Tesco /zigman2/quotes/203761082/delayed UK:TSCO +0.50% , tobacco giant Imperial Brands /zigman2/quotes/208789104/delayed UK:IMB +0.38% , consumer-goods group Unilever /zigman2/quotes/204685760/composite UL -0.18% /zigman2/quotes/205449809/delayed UK:ULVR +0.53% , electricity and gas manager National Grid /zigman2/quotes/208805676/delayed UK:NG -0.77% /zigman2/quotes/204048449/composite NGG -0.51% , Lloyds Banking Group /zigman2/quotes/200709414/composite LYG -2.84% /zigman2/quotes/202285510/delayed UK:LLOY -2.32% , Legal & General /zigman2/quotes/201125471/delayed UK:LGEN -2.57% , private equity and venture capital group 3i /zigman2/quotes/202254899/delayed UK:III -3.01% and property investment and development group Segro /zigman2/quotes/205428601/delayed UK:SGRO -1.03% .

/zigman2/quotes/210598409/delayed
UK : FTSE UK
7,494.13
-90.88 -1.20%
Volume: 734,087
Jan. 21, 2022 4:56p
loading...
/zigman2/quotes/210598409/delayed
UK : FTSE UK
7,494.13
-90.88 -1.20%
Volume: 734,087
Jan. 21, 2022 4:56p
loading...
/zigman2/quotes/210599654/delayed
XX : STOXX
474.44
-8.91 -1.84%
Volume: 0.00
Jan. 21, 2022 11:03p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
4,397.94
-84.79 -1.89%
Volume: 3.20B
Jan. 21, 2022 4:52p
loading...
/zigman2/quotes/202286639/delayed
UK : U.K.: London
382.25 p
-6.90 -1.77%
Volume: 57.17M
Jan. 21, 2022 4:35p
P/E Ratio
16.31
Dividend Yield
2.98%
Market Cap
£76.34 billion
Rev. per Employee
£1.75M
loading...
/zigman2/quotes/207305210/composite
US : U.S.: NYSE
$ 30.71
-0.65 -2.07%
Volume: 17.47M
Jan. 21, 2022 4:00p
P/E Ratio
15.88
Dividend Yield
4.12%
Market Cap
$104.24 billion
Rev. per Employee
$2.39M
loading...
/zigman2/quotes/206428183/delayed
UK : U.K.: London
£ 1,807.40
-31.00 -1.69%
Volume: 5.17M
Jan. 21, 2022 4:35p
P/E Ratio
44.67
Dividend Yield
0.04%
Market Cap
£140.52 billion
Rev. per Employee
£1.88M
loading...
/zigman2/quotes/205095589/composite
US : U.S.: NYSE
$ 48.65
-0.84 -1.70%
Volume: 6.76M
Jan. 21, 2022 4:00p
P/E Ratio
41.44
Dividend Yield
2.87%
Market Cap
$191.88 billion
Rev. per Employee
$2.58M
loading...
/zigman2/quotes/201381512/delayed
UK : U.K.: London
3,429.50 p
-95.00 -2.70%
Volume: 3.79M
Jan. 21, 2022 4:35p
P/E Ratio
8.65
Dividend Yield
5.12%
Market Cap
£47.24 billion
Rev. per Employee
£313,449
loading...
/zigman2/quotes/201381512/delayed
UK : U.K.: London
3,429.50 p
-95.00 -2.70%
Volume: 3.79M
Jan. 21, 2022 4:35p
P/E Ratio
8.65
Dividend Yield
5.12%
Market Cap
£47.24 billion
Rev. per Employee
£313,449
loading...
/zigman2/quotes/207305210/composite
US : U.S.: NYSE
$ 30.71
-0.65 -2.07%
Volume: 17.47M
Jan. 21, 2022 4:00p
P/E Ratio
15.88
Dividend Yield
4.12%
Market Cap
$104.24 billion
Rev. per Employee
$2.39M
loading...
/zigman2/quotes/202286639/delayed
UK : U.K.: London
382.25 p
-6.90 -1.77%
Volume: 57.17M
Jan. 21, 2022 4:35p
P/E Ratio
16.31
Dividend Yield
2.98%
Market Cap
£76.34 billion
Rev. per Employee
£1.75M
loading...
/zigman2/quotes/201381512/delayed
UK : U.K.: London
3,429.50 p
-95.00 -2.70%
Volume: 3.79M
Jan. 21, 2022 4:35p
P/E Ratio
8.65
Dividend Yield
5.12%
Market Cap
£47.24 billion
Rev. per Employee
£313,449
loading...
/zigman2/quotes/201865002/delayed
UK : U.K.: London
1,759.50 p
-66.00 -3.62%
Volume: 359,845
Jan. 21, 2022 4:35p
P/E Ratio
N/A
Dividend Yield
0.65%
Market Cap
£4.73 billion
Rev. per Employee
£135,448
loading...
/zigman2/quotes/202143031/delayed
UK : U.K.: London
135.70 p
-1.20 -0.88%
Volume: 879,140
Jan. 21, 2022 4:35p
P/E Ratio
5.67
Dividend Yield
1.62%
Market Cap
£1.65 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/210449062/delayed
UK : U.K.: London
4,476.00 p
-121.00 -2.63%
Volume: 173,758
Jan. 21, 2022 4:35p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
£4.74 billion
Rev. per Employee
£250,991
loading...
/zigman2/quotes/206663416/delayed
UK : U.K.: London
637.00 p
-3.00 -0.47%
Volume: 453,252
Jan. 21, 2022 4:35p
P/E Ratio
8.63
Dividend Yield
3.85%
Market Cap
£2.21 billion
Rev. per Employee
£877,773
loading...
/zigman2/quotes/205370875/delayed
UK : U.K.: London
280.00 p
-3.00 -1.06%
Volume: 1.47M
Jan. 21, 2022 4:35p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
£2.25 billion
Rev. per Employee
£36,182
loading...
/zigman2/quotes/205743109/delayed
UK : U.K.: London
2,628.00 p
-21.00 -0.79%
Volume: 136,836
Jan. 21, 2022 4:35p
P/E Ratio
0.31
Dividend Yield
0.57%
Market Cap
£2.69 billion
Rev. per Employee
£57,108
loading...
/zigman2/quotes/203787462/delayed
UK : U.K.: London
602.00 p
+1.20 +0.20%
Volume: 6.52M
Jan. 21, 2022 4:35p
P/E Ratio
29.55
Dividend Yield
1.96%
Market Cap
£6.24 billion
Rev. per Employee
£389,583
loading...
/zigman2/quotes/202300097/delayed
UK : U.K.: London
1,190.50 p
-15.00 -1.24%
Volume: 2.62M
Jan. 21, 2022 4:35p
P/E Ratio
N/A
Dividend Yield
2.23%
Market Cap
£13.80 billion
Rev. per Employee
£125,740
loading...
/zigman2/quotes/203813176/composite
US : U.S.: NYSE
$ 79.71
-1.14 -1.41%
Volume: 175,626
Jan. 21, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
2.30%
Market Cap
$18.84 billion
Rev. per Employee
$169,282
loading...
/zigman2/quotes/207133667/delayed
UK : U.K.: London
2,675.00 p
+45.00 +1.71%
Volume: 72,028
Jan. 21, 2022 4:35p
P/E Ratio
179.41
Dividend Yield
0.40%
Market Cap
£738.65 million
Rev. per Employee
£419,931
loading...
/zigman2/quotes/209006687/delayed
UK : U.K.: London
188.75 p
-0.75 -0.40%
Volume: 20.73M
Jan. 21, 2022 4:35p
P/E Ratio
18.29
Dividend Yield
4.08%
Market Cap
£18.78 billion
Rev. per Employee
£211,464
loading...
/zigman2/quotes/200304487/composite
US : U.S.: Nasdaq
$ 59.10
-1.07 -1.78%
Volume: 5.89M
Jan. 21, 2022 4:00p
P/E Ratio
93.28
Dividend Yield
2.32%
Market Cap
$187.08 billion
Rev. per Employee
$452,181
loading...
/zigman2/quotes/203048482/delayed
UK : U.K.: London
8,752.00 p
-90.00 -1.02%
Volume: 1.75M
Jan. 21, 2022 4:35p
P/E Ratio
93.22
Dividend Yield
2.31%
Market Cap
£137.00 billion
Rev. per Employee
£330,242
loading...
/zigman2/quotes/204036468/delayed
UK : U.K.: London
173.70 p
-8.95 -4.90%
Volume: 2.45M
Jan. 21, 2022 4:35p
P/E Ratio
34.19
Dividend Yield
2.35%
Market Cap
£3.68 billion
Rev. per Employee
£149,404
loading...
/zigman2/quotes/203761082/delayed
UK : U.K.: London
288.75 p
+1.45 +0.50%
Volume: 14.13M
Jan. 21, 2022 4:35p
P/E Ratio
18.19
Dividend Yield
3.17%
Market Cap
£21.84 billion
Rev. per Employee
£162,905
loading...
/zigman2/quotes/208789104/delayed
UK : U.K.: London
1,731.00 p
+6.50 +0.38%
Volume: 1.59M
Jan. 21, 2022 4:35p
P/E Ratio
5.79
Dividend Yield
8.03%
Market Cap
£16.32 billion
Rev. per Employee
£546,634
loading...
/zigman2/quotes/204685760/composite
US : U.S.: NYSE
$ 49.31
-0.09 -0.18%
Volume: 5.64M
Jan. 21, 2022 4:00p
P/E Ratio
20.04
Dividend Yield
4.08%
Market Cap
$127.47 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/205449809/delayed
UK : U.K.: London
3,675.00 p
+19.50 +0.53%
Volume: 4.30M
Jan. 21, 2022 4:35p
P/E Ratio
20.20
Dividend Yield
4.02%
Market Cap
£93.35 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/208805676/delayed
UK : U.K.: London
1,083.80 p
-8.40 -0.77%
Volume: 5.59M
Jan. 21, 2022 4:35p
P/E Ratio
25.48
Dividend Yield
4.56%
Market Cap
£39.81 billion
Rev. per Employee
£641,177
loading...
/zigman2/quotes/204048449/composite
US : U.S.: NYSE
$ 73.58
-0.38 -0.51%
Volume: 762,608
Jan. 21, 2022 4:00p
P/E Ratio
25.43
Dividend Yield
4.63%
Market Cap
$54.36 billion
Rev. per Employee
$876,219
loading...
/zigman2/quotes/200709414/composite
US : U.S.: NYSE
$ 2.74
-0.08 -2.84%
Volume: 13.05M
Jan. 21, 2022 4:00p
P/E Ratio
7.60
Dividend Yield
2.53%
Market Cap
$51.36 billion
Rev. per Employee
$762,158
loading...
/zigman2/quotes/202285510/delayed
UK : U.K.: London
51.75 p
-1.23 -2.32%
Volume: 170.21M
Jan. 21, 2022 4:35p
P/E Ratio
7.86
Dividend Yield
2.40%
Market Cap
£37.61 billion
Rev. per Employee
£572,496
loading...
/zigman2/quotes/201125471/delayed
UK : U.K.: London
291.90 p
-7.70 -2.57%
Volume: 12.38M
Jan. 21, 2022 4:35p
P/E Ratio
7.71
Dividend Yield
6.10%
Market Cap
£17.78 billion
Rev. per Employee
£3.44M
loading...
/zigman2/quotes/202254899/delayed
UK : U.K.: London
1,370.00 p
-42.50 -3.01%
Volume: 1.64M
Jan. 21, 2022 4:35p
P/E Ratio
4.74
Dividend Yield
2.94%
Market Cap
£13.66 billion
Rev. per Employee
£1.03M
loading...
/zigman2/quotes/205428601/delayed
UK : U.K.: London
1,297.00 p
-13.50 -1.03%
Volume: 1.28M
Jan. 21, 2022 4:35p
P/E Ratio
6.13
Dividend Yield
1.74%
Market Cap
£15.75 billion
Rev. per Employee
N/A
loading...

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