LONDON -- This week, banks were indisputably in demand, with the most popular purchase by the retail clients of stockbroker TD Direct Investing between the market's opening on Monday and today at noon being Lloyds Banking (LSE: LLOY.L).
But is it a bargain? Up more than 50% this year on the back of a persistent trickle of good news from ‑‑ and about ‑‑ the beleaguered bank, Lloyds has been a popular pick among investors betting that the worst is behind it and that dividend payments will be resumed next year.
That said, yesterday's uncompromising "sell" downgrade by analysts at Investec may have brought the party to an end. As these words are written, Lloyds is down 4% from its 52-week peak reached earlier this week.
Barclays (LSE: BARC.L), the second-most popular buy this week among the broker's private clients, may turn out to be a safer pick, having been the beneficiary of a number of broker upgrades in the last month.
Granted, the share's allure may have been dulled by yesterday's news that the bank was putting aside another 700 million pounds in relation to claims for payment protection insurance -- especially if this pushes the bank into an overall loss when results are announced on Oct. 31.
But in the meantime, while the bank is down 50% against the FTSE 100 over a five-year period and the worst of the financial crisis seems behind us, both traders and investors with a long-term perspective are likely to be seeing more upside than downside.
A clearer picture emerges with Tesco (LSE: TSCO.L), the third-most popular pick by TD Direct Investing's private clients between the market's opening on Monday and today at noon. Heavily bought in the past few weeks following lackluster results which saw 30 pence lopped off the share price, Tesco this week benefited from an upgrade, with UBS waving the "buy" flag and putting a target share price of 370 pence on the company.
With the shares on a rating of just nine times forecast earnings and offering a 5% forecast yield, an upgrade and "buy" rating may be superfluous to investors with an eye for a bargain. But, as they say, every little bit helps.
Last up: Vodafone (LSE: VOD.L), the fourth-most popular buy among the broker's retail clients last week.
The impetus? Continued price weakness, which has seen the shares climb just 2% over the past year, while the FTSE 100 is up 8%. Rated on a market-average P/E of 10.6, the shares offer a whopping forecast dividend yield of 7.4%. No wonder Vodafone is popular with income investors.
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