At its last close, the Lloyds Bank (LSE: LLOY) share price touched 50p once again. This is not the first or the second, but the third time this month that it has risen to these levels. To me this is an encouraging sign. In the past few months the bank’s share price has fluctuated a fair bit. After rising fast in the early part of the year, the Lloyds Bank share price dropped quite a bit, before it started inching back up in September.
Next stop at 60p?
Now that it has touched 50p again, I am interested in what the next stop may be. I find the level of 60p particularly significant right now. At that price, it would finally be back to its pre-pandemic level. In fact, it is among the few stocks in the FTSE 100 index to still be trading below that level. Some of the others include its banking peers, travel stocks, and oil companies.
However, now that bullishness is back in the stock markets, I reckon there is a good chance that these stocks can finally get back to levels last seen in early 2020. The FTSE 100 index dropped below 7,300 at yesterday’s close, but it has been broadly on the rise since October. In the past year, the index has added around 1,000 points, which is an impressive increase.
Recovery supports rise in Lloyds Bank share price
Of course, it can be argued that last November was atypical. The stock market rally was just getting underway then. The markets had been fairly depressed until that time. So, it would be a stretch to think that the performance could be repeated.
At the same time, it is essential to remember that the recovery is still far from complete. The UK economy, for instance, is still slightly smaller than it was before the pandemic started. And many companies that swung into losses last year are yet to get back into a healthy financial state.
This indicates to me that the next year could continue to be good for the FTSE 100 index. Also, banks’ fortunes are closely linked to the economy. So as the recovery ensues, I expect the likes of Lloyds Bank, in particular, to be impacted positively. Also, a large part of the bank’s revenues are derived from the UK, which is much more than can be said for some of its relatively more globalised peers.
What I’d do
Keeping the macro scenario in mind, I am optimistic that the Lloyds Bank share price could rise to 60p sooner rather than later in 2022. In fact, I have expressed the view that it could actually rise much higher, which has put it on my list of stocks to invest in next.
But, as always, it is also essential to be cognisant of the emerging risks. I am concerned about runaway inflation, which could really derail the recovery if not managed properly. Prices have been on the rise from earlier this year, and are expected to stay elevated through 2022. On the other hand, if inflation is managed properly and interest rates rise, it might just be a positive for banks. I like the Lloyds Bank stock right now as a potential purchase for my portfolio.
