Here’s how I think the Lloyds share price might end 2024

The Lloyds Bank share price has gained 40% over the past 12 months. But I think that might be just the start of greater things to come.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

It’s been a rare treat to see the Lloyds Banking Group (LSE: LLOY) share price climbing 40% in the past 12 months.

But is that it for 2024 now? And is the value that we’ve been waiting for for years finally out? I think the answer is no on both counts. And I’m not selling.

The bank sector is not out of the woods yet, though. There is still danger ahead.

Should you invest £1,000 in Lloyds Banking Group right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group made the list?

See the 6 stocks

Created with Highcharts 11.4.3Lloyds Banking Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Finance risk

I think there’s one thing that could help keep the Lloyds share price revival going to the end of the year. And that’s impairment charges, the cash set aside to help cover bad debt risk and things like that.

To be specific, it’s falling. With first-half results, posted in July, we saw an underlying impairment charge of £101m.

Seen against a statutory profit after tax of £2.4bn, that doesn’t seem like a lot. More importantly, it’s down from £662m at the same stage last year.

That’s even though we’ve only had one small interest rate cut from the Bank of England so far. But it does suggest that confidence is strong on the future easing of the burden on mortgage borrowers.

Two sides

There is, however, another side to that particular coin. Lloyds makes a fair bit of its money as the UK’s largest mortgage lender.

So, falling rates might reduce the bad debt risk. But it also lowers the potential for net lending profits. At the interim stage, we had a 13% drop in net interest income, and that’s a concern.

How much further it might move could have an effect on Lloyds year-end position, and it might not be a positive effect.

Lloyds’ historical motor insurance business is under investigation, which affected the first half. But there were no new charges at H1 time. We should have an update from the FCA in September, and that could give the Lloyds share price a few jitters.

Valuation, valuation

Still, for me, looking at Lloyds through the long-term goggles that I’ve worn for my entire investing career, it all comes down to one thing. And that’s valuation.

We should always treat analyst forecasts with caution. But I see a forecast price-to-earnings (P/E) ratio of under 10 for this year, dropping as low as seven by 2026, as leaving plenty of room for error.

It’s been lower in recent years, but that just makes me wonder why the market couldn’t see it then for the anomaly that I was convinced it was.

And seven is still only about half the FTSE 100‘s long-term average P/E. I’ll happily admit that the risk still facing the country’s banks means they probably should be valued lower than average right now.

Next few months

But for long-term investors, shouldn’t we be thinking about how Lloyds’ earnings are likely to go in the next 10 years and more, not the next few months?

On that basis, and on how I expect the market to treat short-term issues, I reckon the Lloyds share price could go anywhere by the end of the year. But I think it deserves to be higher, and could rise further.

Oh, and I haven’t even mentioned the foward dividend yield, at 5%.

Of course, there are plenty of other passive income opportunities to explore. And these may be even more lucrative:

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft has positions in Lloyds Banking Group Plc. The Motley Fool UK has recommended Lloyds Banking Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Like buying £1 for 51p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Young Asian woman with head in hands at her desk
Investing Articles

As the S&P 500 struggles to recover, here’s what Warren Buffett’s doing

The S&P 500 is fighting to regain its February highs amid ongoing trade tariff uncertainty. Our writer looks to the…

Read more »

Investing Articles

When will Lloyds shares hit £1?

Lloyds shares have surged over the past 12 months, but where will they go next? Dr James Fox thinks there’s…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

Stock-market crash: the meltdown of the Magnificent 7

Just before Christmas, these Magnificent Seven stocks were riding high. But after the worst quarter for US stocks since autumn…

Read more »

Investing Articles

Wow! IAG shares are undervalued by 47%, according to analysts

IAG shares have surged over the past 18 months, but analysts are pointing to more growth. Dr James Fox takes…

Read more »

Investing Articles

2 cheap FTSE 100 and FTSE 250 shares to consider for an ISA before 5 April!

These FTSE 100 and FTSE 250 shares are on sale today! Here's why long-term Stocks and Shares ISA investors should…

Read more »

Investing Articles

How I’m building a new second income for 2035

Millions of us invest for a second income. Here are the steps Dr James Fox is taking in order to…

Read more »

Investing Articles

At a 52-week low but forecast to rise 73%! Is this growth share the FTSE’s top recovery play? 

This FTSE 100 growth share has taken an absolute beating over the past two years but Harvey Jones says the…

Read more »

Investing Articles

This FTSE 250 share offers a juicy 9.8% yield. Will it last?

This well-known FTSE 250 share has a percentage dividend yield approaching double digits. Should Christopher Ruane add the income share…

Read more »