The Motley Fool

Is the Lloyds share price cheap enough for me to buy the stock?

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.

A brochure showing some of Lloyds Banking Group's major brands
Image: Lloyds Banking Group

The going’s been tough for long-term investors in Lloyds Banking Group (LSE: LLOY). But the Lloyds share price has performed strongly following the 2020 stock market crash as hopes of a strong economic rebound have improved.

Prices of the FTSE 100 bank have risen 56% during the past 12 months. What’s more, the Lloyds share price hit new 15-month peaks on Monday before succumbing to the broad sell-off across UK share markets yesterday.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

So is now the right time to buy in the belief the Lloyds share price can soar again? Or is the bank’s recent rise simply a false dawn?

Lloyds’ share price soars…

To recap, Lloyds’ share price set off like a train in November when news of successful Covid-19 vaccine trials emerged. The subsequently successful rollout of these pandemic battlers in the bank’s UK marketplace has boosted hopes of a sharp profits rebound at the bank too, pulling its share price higher in the process.

A slew of positive trading updates from fellow FTSE 100 banks have also fed hopes of a strong industry recovery. Lloyds reported profits of £1.9bn in the first three months of 2021, a result which blasted past broker expectations. And the firm also hiked its 2021 return on tangible equity expectations. The company’s estimate now sits at 8-10%, up from the 5-7% it had targeted in February.

The Bank of England’s decision to upgrade its growth forecasts has boosted the Lloyds share price as well. Last week, Threadneedle Street upped its GDP estimates for 2021 to show growth of 7.25%, up from the prior prediction of 5%. For many, the chances of a strong profits bounceback at the bank — and the possible return of dividend payments  — continue to grow and grow.

…but can it keep rising?

It’s quite possible the Lloyds share price could keep soaring in 2021, perhaps even beyond. But, as a long-term investor, I’m not interested in buying the FTSE 100 bank for my Stocks and Shares ISA.

This isn’t just because the jury’s still out on whether the UK economic rebound can roll on. Government furlough schemes are set to conclude later this year, a scenario that could cause unemployment to spike and choke off the recovery. There’s also evidence the expected sustained surge in consumer spending might not transpire, given the still-uncertain economic outlook.

I’m also not expecting the Bank of England to lift interest rates significantly any time soon in another threat to bank’s profits. Policymakers has largely been supportive of maintaining loose monetary policy, at least in public.

Low interest rates are a major reason why the Lloyds share price struggled during the latter half of the 2010s. And I expect them to remain around recent record lows for a long time. With competitive pressures from the challenger banks also rising, I reckon the long-term outlook for the Lloyds share price remains pretty downbeat.

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you'll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.