HomeStock MarketWhere will Lloyd's stock price go in October?

Where will Lloyd’s stock price go in October?

After the continued bull market, the stocks of the banking giants Lloyd (London Stock Exchange: Lloyd) Spent a boring summer. Although Lloyd’s share price is 85% higher than a year ago, it has mostly been on a downward trajectory since the end of May.

Can we see a reversal of this trend in the fall? This is what I think might happen to Lloyd’s stock price in the coming weeks.

The upward driving force of Lloyd’s share price

Although Lloyd’s share price has been falling in recent months, I think the basic investment case is still strong. It has a strong position in the UK home market and it is a leading mortgage lender.By operating under a different name, for example Lloyd, Halifax with Bank of Scotland, It can attract different types of customers in different locations.

Although fintech is entering the UK banking industry, the profits of large banking groups are still high. The number of Lloyds. In its half-year performance, the company’s basic profit exceeded 4 billion pounds. If the half-year earnings per share of 5.1 pence are maintained throughout the year, based on the current Lloyd’s stock price, the expected price-to-earnings ratio will be less than 5. This is very valuable in my opinion.

However, this has been for some time. The half-year performance did not lead to continued active re-rating by the banking giants. It remains the only long-term low-priced stock in the FTSE 100 Index. In addition, there is no specific reason to expect good news from the Lloyds Index in October. If so, I think there is a risk that concerns about economic shocks such as supply chain issues may affect the default rate of corporate customers.

A bearish view of Lloyd

Lloyd has restored dividends and resumed very strong business performance. But its stock price is still declining. why is that?

In my opinion, various factors have weakened people’s enthusiasm for Lloyd this year.The CEO’s transformation and its Work hard to become a landlord Emphasizes the possibility of errors as the organization develops. In addition, the sharp price increases in the past 12 months indicate that Lloyd’s stock price has taken into account higher expectations. In order to push up the stock price, the bank may need some good news to surprise investors. This may include stronger-than-expected results, or special dividends.Third quarter transaction update Scheduled for October 28 It’s worth seeing.

At the same time, there is still uncertainty about the sustainability of the British economy’s recovery from the pandemic. If there are signs of stuttering as employers surpass vacation and emergency support plans, the Lloyd’s mortgage default rate may rise.

I will buy at the current Lloyd stock price

So I don’t see any special reason to expect Lloyd’s stock price to fluctuate sharply in October. However, I do see the recent drop in Lloyd’s share price as a buying opportunity for my portfolio. This is a well-run and profitable company in the durable field. I think its long-term prospects are still solid, and it can further increase the resumption of shareholder distribution in accordance with the bank’s progressive dividend policy. Any fall in October can be a buying opportunity for me because I am very happy to buy and hold Lloyds Bank in my portfolio for the next few years.

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Christopher Ruane owns shares in Lloyd. Motley Fool UK recommended Lloyds Banking Group. The views expressed by the companies mentioned in this article are those of the author and may therefore differ from the official recommendations we made in subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that taking into account a variety of different insights, We are better investors.

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