If I'd invested £1,000 when the Barclays share price was rising, here's what I'd have now

I Barclays (LSE:BARC) share price fell to £1.33 after the Silicon Valley Bank (SVB) fiasco in March 2023. It fell further last year, to just £1.29 a share.

But the turnaround has been surprisingly strong, driven by a changing macroeconomic environment, strong UK growth forecasts, and strong results.

If I had invested £1,000 in the stock when it hit £1.29, today I would be a very happy man. My investment would have increased by 83.7%, giving me £1,837 plus dividends.

The strong results mentioned above continued on Thursday (August 1). The British bank beat analysts' estimates despite declining earnings.

Things are going well

Momentum is a very important factor in investing. It's not just the stock price boost, but the business as a whole.

As an investor, I look for companies that continue to outperform analysts' expectations. And after two consecutive earnings beats and the announcement of a three-year business development plan, Barclays appears to have plenty of momentum.

In first-half results, Barclays reported a 9% drop in first-half pre-tax profit to £4.2bn, beating analysts' forecasts of £3.8bn. Remember though, the first half of 2023 was really different as interest rates are still rising.

This drop from £4.6bn last year was offset by a strong investment bank performance, which saw revenue rise by 10% to £3.02bn in Q2.

Despite a 4% fall in interest income at its consumer bank, Barclays announced a dividend return of £750m and 2.9 pence per share.

Second quarter net profit was £1.2bn, slightly below the £1.3bn last year but above the £1.03bn expected by analysts.

The stock edged higher in morning trading, but perhaps less than expected. I would suggest that the reaction is somewhat muted due to the Bank of England (BoE) rate decision, which is due later in the day.

Why should I buy Barclays now?

Barclays trades at around 7.3 times forward earnings. That still sounds cheap to most of us, but last year it was trading at about 4.5 times earnings.

So why should I buy Barclays stock now? First, we all wish we had bought Barclays stock when it crashed. I came up after the SVB fiasco, but unfortunately I had to sell some of my belongings to buy a house.

However, if it wasn't for the fact that Barclays remains one of my biggest holdings, I would consider buying more today.

That's because the economic situation is improving, the new government seems to be giving more stability to UK-focused stocks, and that gives us more clarity on what we expect to happen.

One supportive trend is falling interest rates – yes, they are falling. Higher interest rates are not always good for banks, and in fact they benefit from the relaxation of the so-called structural hedge.

Forecasts suggest that Barclays' hedging practices could bring in more than £6bn by 2025 alone.

Worryingly, we now expect too much from the BoE, the UK economy, and Barclays. Personally, I'm optimistic.