Watch stocks you care about
The single, easiest way to keep track of all the stocks that matter...
Your own personalized stock watchlist!
It's a 100% FREE Motley Fool service...
LONDON -- So far, 2013 has been a good year for investors. The FTSE 100 has risen 4.6%. Many shares are up significantly. One of the best performing sectors is the U.K.'s banks.
Last week, shares in HSBC (LSE: HSBA ) (NYSE: HSBC ) rose to 694 pence. In the last year, the shares are up 28%. The current share price is the highest it has been since February 2011. Add in 28 pence of dividends, and it is clear how well rewarded HSBC shareholders have been in the last year.
Elsewhere in the sector, Barclays is up 13.3% in 2013. So far this year, Lloyds Banking Group shares have risen 11.6%, and Royal Bank of Scotland has advanced 12.2%.
The sector has risen massively in the last year as eurozone policymakers moved to ease panic in the financial markets. This has helped inspire rises throughout the market.
HSBC's 2013 rise is the least of these because it is perceived as the safest share of the bunch. When there is less pessimism baked into a company's share price, the rise is usually smaller when sentiment turns.
While Lloyds and RBS were reporting huge losses during the financial crisis, HSBC made a profit throughout. HSBC also managed to continue paying a dividend during the worst of the crisis and recession. RBS shareholders haven't had a dividend since 2007.
I think that there is further to go in HSBC's rise. The shares are cheap right now. At today's price, they trade on just 10.8 times forecast earnings for 2013. That's a considerable discount to the average FTSE 100 share, where the average price-to-earnings (P/E) ratio is 15.9. When you consider the fact that HSBC's 2013 profits are forecast to be 12% up on 2012's, that P/E seems rather mean. Also, there is considerable scope for significant earnings growth in the business as economies around the world improve.
HSBC's proven resilience should inspire a higher share price by itself. Before the collapse of Lehman Brothers in 2008, shares in HSBC traded at over 900 pence. I expect that they will eventually reach those heights again. Don't be surprised if you see HSBC shares making an assault on 800 pence in 2013.
Investing in cyclical shares as they come into favor again can bring big portfolio returns. If you want to learn more stock market strategies that could seriously improve your wealth, then get the free Motley Fool report "10 Steps to Making a Million in the Market." This report is 100% free and will be delivered to your inbox immediately. Simply click here to get the report today.