Business & Investment

Lloyds’ stock price is over 40p!I think this is just the beginning

The· Lloyds (LSE: LLOY) Stock prices soared above 40p in March as the outlook for the UK economy continued to improve.

I think this trend will continue. Lloyds could be one of them as the country begins to open up again after the pandemic and businesses and consumers start spending again. Main beneficiaries..

Economic recovery

At this time last year, the coronavirus crisis had begun, so economists and city analysts were in a hurry to figure out how much the crisis would cost. The city was vigilant and there was speculation that the crisis could cause some banks to collapse.

Fortunately, it turned out that the crisis wasn’t as bad as expected. Banks haven’t collapsed and government borrowing has skyrocketed, while at this point a full-scale recession has been avoided.

The outlook for the UK economy has improved dramatically in recent months. Many economic performance indicators exceed expectations. I think this has been a major factor in Lloyd’s stock prices these days.

As one of the UK’s largest banks, Lloyds should thrive if the economy is on track. I think this suggests that lenders may report strong growth in 2021.

The pandemic isn’t over yet and may have financial implications, but Lloyds is working incredibly well up to this point. Lenders regained profits in the fourth quarter of last year, despite securing £ 4.2 billion due to a pandemic-related credit loss.Pre-tax profit £ 1.2bn a year..

Strong mortgage lending was one of the bright spots of banks last year. Lloyds has grown its mortgage business by more than £ 7 billion.

The group’s balance sheet is also stronger than it was at this point last year.

Lloyds stock investment

All of the above will provide a solid foundation for the Group to return to growth in 2021. In fact, analysts have already made a net profit of £ 2.9bn in 2021 and have risen to £ 3.4bn in 2022. It is an estimate and banks are not guaranteed to meet these revenue targets.

Still, with the bank’s outlook improving, I think Lloyds’ stock price could continue to rise in 2021. Currently, the stock price is trading at a book value of 0.6, which seems unreasonable. Theoretically, profitable companies should trade at or around book value. On a per-share basis, the book value of the shares is 69p.

Considering all of the above, I buy Lloyds for my portfolio today.

However, this is not suitable for all investors as the group faces some significant risks. Low interest rates can hurt profit margins for the foreseeable future. If the UK economic recovery doesn’t live up to expectations, Lloyds will be one of the first to feel the fever.

Some investors may want to avoid financial institutions as they can be difficult to analyze. Also, it is not possible to accurately grasp the contents of the balance sheet.

Despite these risks, Lloyds’ stock price is undervalued and I think it looks attractive as an investment.


Rupert Hargreaves does not own the mentioned share. The Motley Fool UK recommends the Lloyds Banking Group. The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, by examining different insights, Better investors than us.



Lloyds’ stock price is over 40p!I think this is just the beginning

https://www.fool.co.uk/investing/2021/04/04/the-lloyds-share-price-is-back-above-40p-i-think-this-is-just-the-start/ Lloyds’ stock price is over 40p!I think this is just the beginning

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