The FTSE 100 has had a strong year. Nonetheless, I still see plenty of value in UK shares right now. 

While this year has produced spells of volatility, that’s inevitable in the stock market. Looking at the bigger picture, I think UK equities could be primed to soar in the years ahead. 

The FTSE 100 currently has an average price-to-earnings (P/E) ratio of 11. That’s lower than its historical average of between 14 and 15. 

I especially like the look of these two. If I had the cash, I’d add them to my portfolio today. 

JD Sports Fashion

First is JD Sports Fashion (LSE: JD.). Its shares have disappointed this year. They’re down 3.7%. That said, the stock is up 16.2% in the last six months and 14.3% in the last month. After a poor start to the year, it is gaining good momentum. 

Even despite that rise, I still think the stock looks like good value for money. It trades on a P/E ratio of 14.8. That’s considerably less than it’s historical average of 23. 

Its share price had a poor start to the year due to tough trading conditions. Sales had experienced a major downturn and as such the firm issued a profit warning. Spooked investors rushed to offload their shares. In the months to come, this will continue to be a threat to the firm as consumers watch their spending habits and trading conditions remain difficult. 

However, looking past that, I think JD Sports Fashion could thrive over the long run. To start, interest rate cuts should lead to a pick up in spending. What’s more, the company has been making solid progress with its plans for expansion. It is aiming to open 200 stores this year and has also begun to focus more on international expansion. As part of this, it recently acquired US company Hibbett earlier this year, which has over 1,100 stores across the pond. 

NatWest

Unlike JD Sports Fashion, NatWest (LSE: NWG) has had a brilliant year. The stock has been on a tear. Year to date, it’s up 55.9%. 

That blows the FTSE 100’s return out of the water. However, even after rising, I think its shares still look cheap. 

They now trade on a P/E of 7.1. In my eyes, for a business of NatWest’s quality, that looks dirt cheap. Its forward P/E is 7.8. 

I also like NatWest for the passive income on offer. Its dividend yield sits at 5%, covered over two times by earnings. Last year, the bank upped its payout by 26% to 17p per share. 

I’ve also been impressed by its performance in recent times. Profit for the second quarter climbed by over 25% to £1.3bn. In its latest update, NatWest also announced it had acquired a portfolio of prime UK residential mortgages from Metro Bank for £2.5bn. 

The largest threat I see to the firm is falling interest rates. While they’ll boost investor sentiment, they’ll shrink NatWest’s margins, which will dent its profits. 

But with momentum on its side, as well as its low valuation, I like the look of NatWest. 

The post 2 brilliant UK shares I’d buy today appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

The FTSE 100 is a great place to find shares that provide a juicy second income. It’s full to the brim with high-quality companies that are keen to reward loyal shareholders.

I’ve been perusing the index for stocks I see great value in. And while it can be difficult to whittle it down, I have my eye on a couple in particular. I’d love to buy these two today if I had the cash.

HSBC

First up is HSBC (LSE: HSBA). The stock has had a volatile 2024. After nosediving by 8% back in February following the announcement of its full-year results, which left investors disappointed, its shares have made a strong recovery. With that, HSBC is up 6.7% year to date.

My main attraction to the Footsie bank is its 7.2% yield. That’s the sixth-highest on the index and double its average payout.

While that’s impressive enough, this year the firm will pay shareholders a special one-off dividend after the sale of its Canadian unit. Taking that into account, its yield will sit closer to 10%.

The bank is heavily exposed to Asia and, in my view, that’s a double-edged sword. On the one hand, the flagging Chinese economy and, more specifically, its property market has seen HSBC suffer in recent months. I’m expecting further volatility in the months ahead, so that’s something I plan to keep a close eye on.

On the other hand, I’m excited by the growth opportunities the region can provide for the business in the years ahead. Asia is home to some of the fastest-growing economies in the world.

To go with that, the stock looks like good value. It trades on a price-to-earnings (P/E) ratio of just 7.4. That’s below the Footsie average of 11.

Legal & General

Like HSBC, Legal & General (LSE: LGEN) has also experienced an up-and-down 2024. Year to date, the stock is down 8%.

But with its share price falling, that means the financial services giant now has a whopping 9% payout, the third-highest on the index. What I also like about Legal & General is that its yield has been steadily rising in recent years. That has been fuelled by management’s eagerness to give back.

Most recently, the firm has set out its five-year cumulative dividend plan, which will end this year. During that time, it would have returned just shy of £6bn to shareholders.

In the short term, I think we may continue to see the stock go through bouts of volatility. Inflation and high interest rates remain an issue. Ongoing economic uncertainty is a big detriment to the firm’s operations. It can lead to customers pulling money from funds.

But in the long run, I think Legal & General is well positioned to excel. For example, with an ageing UK population, demand for the business’ services will naturally rise.

Like HSBC, the stock also looks like good value, trading on a forward P/E of just above nine.

The post 2 shares I’d love to buy from the FTSE 100 for passive income! appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended HSBC Holdings. 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.

The Aviva (LSE: AV.) share price has put on a brilliant performance this year so far. In 2024, the stock is up 11.9%. That means in the last 12 months, Aviva has climbed 27.2%.

That means it’s outperformed the FTSE 100 across both timescales. While buying index trackers can offer a smart and simple way to build wealth over time, picking individual stocks can also prove to be incredibly beneficial.

But with the stock jumping this year, would it still make a shrewd addition to my portfolio? I’ve been keeping a very close eye on the insurance stalwart over the past couple of months. With its share price gaining momentum, I reckon now could be the time for me to strike. Let me explain why.

Value for money

Firstly, I think the Footsie constituent looks like good value for money. It currently trades on a price-to-earnings (P/E) ratio of 10.1. That’s below the FTSE 100 average of 11. For a company of Aviva’s quality, I think that’s a steal. Its forward P/E is 10.5. Again, I think that looks like great value.

Dividend yield

Then there’s its dividend yield, which currently stands at 7%. I’m an investor who targets stocks providing meaty passive income. Aviva’s payout is comfortably above the FTSE 100 average of 3.6%. In fact, it’s the fifth-highest yield on the index.

Dividends are never guaranteed. That said, I reckon we could see Aviva’s payout rise in the years to come. I say that because management seems keen to keep rewarding shareholders. Last year, the business upped its dividend by 8% to 33.4p per share. Its first-half results this year revealed that its interim dividend jumped 7% to 11.9p.

Looking ahead, its forward yield for the upcoming year is 7.1%. By 2026, some predict that could reach as high as 8.4%.

I’m also a fan of its share buyback programmes. The most recent announcement came in March, with it totalling £300m.

Streamlining

Aside from that, there are other reasons why I’m bullish on Aviva. I’ve been especially impressed with the turnaround the firm has made in the last couple of years. From a business that was critiqued for being inflated with too many operating divisions, Aviva is now making good headway with its streamlining process.

This has sped up since CEO Amanda Blanc took over. Under her leadership, Aviva has offloaded struggling divisions and placed greater focus on profitable regions. For the first half of the year, operating profit rose by 14% to £875m. That’s off the back of a strong 2023.

The risks

Of course, the moves it has made in recent years do come with risk. Focusing on just a few markets leaves the business reliant on a handful of regions. Should they experience a downturn, this could see the stock suffer.

Furthermore, the insurance industry is very competitive. There’s the ongoing rising threat from smaller competitors such as insurtechs.

I’d buy today

But at its current price, and with its thumping yield, I think Aviva would be a savvy buy for my portfolio. I’d happily buy the stock today if I had the cash.

The post 7% yield and a P/E of 10.1! Is the Aviva share price a steal? appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

It has been an incredible year for the Rolls-Royce (LSE: RR.) share price. In the last 12 months, it has risen by a staggering 140.9%.

But with the stock now sitting at £5.22, what’s next for the FTSE 100 stalwart? It seems like Rolls is unable to slow down at the moment. But surely its share price can’t just keep rising?

Exciting times ahead?

Well, to answer that, it’s worth looking at what has boosted the stock in recent times. The latest reason is that Rolls was chosen by CEZ Group, the Czech state utility company, as the preferred choice for its small modular reactor (SMR) programme. The British icon secured the deal over six competitors who were also vying for the contract.

That’s exciting. For years, investors have been bullish on Rolls’ SMR business’s potential. Now, it seems we’re finally seeing its potential to fruition.

Overvalued?

But while that’s all well and good, where does this leave Rolls stock today? Essentially, I’m intrigued to see if there’s any room for future growth.

There are multiple ways to answer that question. Let’s start by using the key price-to-earnings (P/E) ratio.

Rolls currently trades on a P/E of 19.1. That’s above the FTSE 100 average of 11. Looking ahead, its forward P/E rises to 31. For comparison, competitor BAE Systems trades on a P/E of 20.4 and a forward P/E of 16.7.

I can also look at its price-to-sales (P/S) ratio. Rolls’ current P/S is 2.5. BAE Systems is 1.6.

Double-digit rise?

Based on the above, it could be argued that Rolls shares are overvalued. But there are other ways to see what the stock could potentially do in the times ahead. One is looking at analyst forecasts.

These must be taken with a pinch of salt. They can be wrong. However, I think they’re a good guide.

Fourteen analysts offering a 12-month target price for Rolls have an average price of £5.81. That’s an 11.3% premium from its current price.

Strength to strength

So, even after soaring, experts think the stock has more to give. In all fairness, I can see why.

The business has posted a brilliant turnaround from where it was during the pandemic. Under CEO Tufan Erginbilgic, the firm has gone from near bankruptcy to posting impressive growth.

Since taking over last year, profits have rocketed. In its most recent update, Rolls posted an operating profit of £1.1bn. That’s 74% higher than from the same period the year prior. The firm is targeting an operating profit of up to £2.8bn by 2027.

If it achieves that, I think we could see its share price continue its fine form. But of course, it’ll face challenges along the way. For example, supply chain issues could prove to be an issue. In its update, it revealed that it expects up to a £200m cash impact to these issues on its free cash flow for this year. It also stated these issues will likely continue in the next two years.

One I like

But I’m a fan of Rolls and the trajectory the business is on. While it may look expensive, I’m fine paying for quality. I’m hoping to have some investable cash this month, so I’ll be picking up some shares.

The post Surely the Rolls-Royce share price can’t keep rising? appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended BAE Systems and Rolls-Royce 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.

The FTSE 100 has been in good form this year. Plenty of stocks on the index have posted healthy gains. However, I have my eye on two constituents in particular.

If I had the cash, I’d happily add both to my portfolio today. Here’s why.

Marks and Spencer

First on the list is retail giant Marks and Spencer (LSE: MKS). The stock has posted a strong performance in 2024, rising 35.1%. In the last five years, its shares are up a thumping 98.2%.

It has kicked into life in recent times. After years of the business falling behind its competition, its share price suffered. However, with a solid turnaround strategy now in place, M&S shares are now gaining momentum.

Even after their rise, I think they still look like good value for money. They’re trading on a price-to-earnings (P/E) ratio of 17.9 and a forward P/E of 14.4. While that’s slightly above the FTSE 100 average of 11, I’m happy paying a premium for quality.

With Marks and Spencer, I think I’m getting just that. In recent years, the business has modernised its stores, improved the quality and value of its clothing ranges, and upgraded its e-commerce operations. After years of failing, it seems CEO Stuart Machin and his predecessor Steve Rowe have implemented a strategy that will help the firm return to its former glory. Last year, profits jumped by 58%. I’m optimistic it can keep this up going forward.

That said, it’ll face challenges. Inflation remains a threat. A rise in interest rates would likely see consumers cut back on spending. A delay in future interest rate cuts would also have the same impact.

But with inflation moving closer to the government’s target. And with more rate cuts predicted in the coming months, I’m bullish on the FTSE 100 constituent.

Unilever

Next up is Unilever (LSE: ULVR). Like its Footsie peer, the stock has put up a brilliant performance in 2024. Year to date, it’s up 27.8%.

There are a couple of reasons why I’d buy Unilever today if I had the investable cash. The first is because it’s a defensive stock. The products it sells are essential. Every day, over 3.4bn people use its goods. That means there should be steady demand regardless of external factors such as the strength of the economy.

On top of that, I like the stock for the passive income it provides. It has a dividend yield of 3%. That’s slightly lower than the FTSE 100 average of 3.6%. However, Unilever is a Dividend Aristocrat and has an impressive track record of rewarding shareholders.

While the products it sells are essential, they are slightly-more-premium brands. That means they come at a more expensive price. One threat with that is cheaper competition stealing customers. That threat is heightened during a cost-of-living crisis, when people are shopping around for the best deals.

But despite that, the business has posted impressive growth in recent years, even with tough trading conditions. I’m also excited to see where Unilever goes in the times ahead with its streamlining mission.

The post These 2 FTSE 100 stocks have been soaring! I’d buy them today appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Unilever. 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.

Nvidia (NASDAQ: NVDA) stock is constantly yo-yoing. Shares in the chipmaker have been on a rollercoaster journey this year.

Despite being up an incredible 157.5% year to date, that doesn’t paint the full picture. During that time, its share price has experienced some wild peaks and troughs. For example, looking across the last month, the stock is down 3.3%. However, it has climbed 6% in the last week.

But with it gaining momentum, could now be a good chance for me to consider adding the artificial intelligence (AI) player to my portfolio? Let’s explore.

Incredible rise

Nvidia’s rise over the past couple of years has been nothing short of amazing. From being a largely unknown business just a few years back, the chipmaker is now one of the most talked about stocks out there. In all fairness, a 2,791.4% rise in five years will tend to have that effect.

Naturally, its rise to fame has garnered plenty of attention. And while that may have proved to be beneficial for long-term shareholders, it does come with risk. The first is that there’s ongoing talk of a bubble in the AI industry.

People are buying into the AI hype. And with the growth predicted for the space, it’s easy to see why. However, some believe investors are snapping up the stock solely out of FOMO (fear of missing out). While that can drive its share price higher when times are good, it also creates the opportunity for its share price to come tumbling down if growth slows down.

Too expensive?

I’m not sure I want to take on that risk. I’m not comfortable with my holdings experiencing major share price swings as often as Nvidia does. But to try and get to the bottom of whether it’s really a stock for me to add to my holdings today, I want to take a look at its valuation.

Nvidia trades on a price-to-earnings (P/E) ratio of 58.3. The S&P 500 average is 23. So, while tech stocks tend to trade at a premium, that still looks very expensive in my eyes. Its forward P/E is 43.5. So, while that makes for a slightly better reading, I still think that’s a tad too overpriced.

Similarly, the stock looks overpriced when assessing its price-to-sales (P/S) ratio. It currently stands at a whopping 30.4. For context, the average P/S of the remaining ‘Magnificent Seven’ is 8.5.

Going on that, Nvidia looks like a stock to steer clear of, even after its share price has been gaining momentum in recent days.

More to come?

But then again, what’s to say if the business keeps up its incredible performance that it can’t just keep soaring?

For multiple consecutive quarters the firm has exceeded analysts’ expectations. Despite its lofty valuation, if it keeps this trend up, there’s nothing to suggest the stock will continue to climb.

Its latest set of results came in August. For the period, revenue grew 122% compared to the year prior.  

Not for me

With that said, Nvidia is a stock I’m staying away from for now. The threat of an AI bubble deters me. What’s more, the stock looks incredibly expensive.

The post Nvidia stock is up 6% in a week! Is it time to buy? appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Nvidia. 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.

£10,000’s a healthy amount to have tucked away. So if I managed to save up that much, I’d want to make sure I made it work as hard as possible for me. Yes, I could leave it in the bank and pick up a fairly attractive interest rate. But instead, I’d invest in the stock market and start making a second income.

I think over time, that’s the smarter thing to do. When rates fall, so will the amount of interest I receive. The market’s proven over time that investors willing to play the long game are rewarded.

To start making a second income, I’d buy stocks with meaty dividend yields. It’s a method I’ve been using since I started investing. If I had £10,000 stashed away, here’s what I’d do.

Open an ISA

Before I even considered buying any shares, I’d open a Stocks and Shares ISA. Every year, UK investors have up to £20,000 to invest in their ISA. This comes with a handful of benefits. The main one is that any capital gains made or dividends received aren’t taxed.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Buying stocks

So I’ve set up my ISA. Next, I need to decide what sort of businesses I want to invest in. I tend to stick with the FTSE 100. Many of its constituents are well-known companies with massive customer bases operating in large industries. They also tend to offer handsome yields.

Take M&G (LSE: MNG) as an example. It’s a stock I’d buy today if I had the cash. In all fairness, it hasn’t posted the best performance in 2024. During that time, it’s down 6.9%. But I still like the look of its shares.

Its weak outing this year can be pinned down to ongoing economic uncertainty. Inflation’s a lingering threat. High interest rates and the risk of a delay in future cuts are also a detriment to its operations. Due to these factors, investors can pull their money out of funds. We’ve seen this play out over the last couple of years and it’s something to watch moving forward.

But with its 9.5% yield, I’m a fan of M&G. That’s one of the highest payouts on the index. What’s more, since listing in 2019, the business has raised its dividend every year. Dividends are never guaranteed. However, management has said it aims to keep this trend up moving forward.

M&G also operates in a massive industry with strong growth potential. It has good brand recognition and a large customer base (over 5m) alongside 900 institutional customers.

Finally, its shares look like decent value, trading on just 8.5 times forward earnings. That’s below the FTSE 100 average of 11.

Generating a second income

Taking M&G’s 9.5% yield and applying it to my £10,000 would see me earn £950 a year as a second income. That’s not bad. But I’m aiming for more.

That’s why I’d reinvest every dividend I received into buying more shares. By doing so, I’d benefit from ‘dividend compounding’.

By doing that, after 30 years my £10,000 could be generating £15,434 a year as a second income. My initial lump sum would have grown from £10,000 to £170,949. That would go a long way in helping me during retirement.

The post £10,000 stashed away? Here’s how I’d aim for a second income worth £15,434 a year appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended M&g 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.

Barclays (LSE: BARC) shares have been on a strong run. Year to date, the stock’s risen 45.3%. In the last 12 months, it’s returned 42.6% to shareholders.

By comparison, the FTSE 100’s up 7.5% and 9.3% across the same timescales. While buying index trackers can prove to be an effective way to build wealth, if I’d invested in Barclays instead I’d be a happy investor.

But it gets even better. As an investor who buys stocks with the aim of holding them for at least five years, it makes sense to take a look at the banking stalwart’s performance over that period. Once again, it’s outperformed the wider index, climbing 49.7% compared to the Footsie’s 11.8% rise.

While that’s all well and good, it does beg one question: is there any further for Barclays stock to go? Well, I’d answer yes. And if I had the cash, I’d snap up Barclays for my portfolio today. Here’s why.

Cracking value

Despite soaring in the last five years, the stock still looks cheap as chips. For example, its price-to-earnings (P/E) ratio currently sits at a mere 8.9. Granted, all FTSE 100 banks look good value at the moment. Nonetheless, that’s still considerably lower than the Footsie average of 11.

Furthermore, its forward P/E comes in at 6.9. That’s also cheap as chips. And that low valuation looks like a brilliant deal for a business of Barclays quality, in my view.

Another way to portray its cheap price is by looking at the price-to-book (P/B) ratio. This is a more common metric for valuing banks. The firm’s P/B is just 0.5, where 1 is often considered fair value. Again, that highlights that even after its rise, Barclays may have further to go.

The business

But how’s the business shaping up? Granted, the stock looks cheap. But what could be in store for the bank in the coming years?

Well, I think the times ahead could be prosperous. I say that largely due to the recent strategic overhaul the business announced. For years, Barclays had been scrutinised for falling behind its competition. CEO CS Venkatakrishnan has put in motion plans to change this.

As part of this, the firm’s aiming to cut up to £3bn in costs by 2026. To achieve that, Barclays will streamline to operate under five divisions. This should help boost efficiency and increase accountability, according to the bank.

Potential threats

While that does sound exciting, restructuring’s always a threat. Say Barclays doesn’t achieve its targets. That would leave shareholders disappointed and could see its share price suffer.

As well as that, the bank will also be negatively impacted by falling interest rates. The Bank of England cut the base rate by 0.25% to 5% in August. Further cuts are likely in the months ahead. This will shrink Barclays’s margins which, in turn, will squeeze its profits.

I’d buy today

But while the business may face some short-term volatility, I see real long-term value in the stock even after its impressive performance in recent times. I reckon it could be one of the best bargains on the FTSE 100.

I’m hoping to have some investable cash over the coming weeks. I’ll be picking up some shares.

The post Up 46%, are Barclays shares one of the best buys on the FTSE 100 right now? appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays 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.

It hasn’t been the best year for Legal & General (LSE: LGEN). Its share price has taken an 8% hit in 2024. On the flip side, the FTSE 100 is up 7.5%.

But with the stock falling this year, I’ve been watching it closely. In fact, I reckon now could be a smart time for me to consider buying some shares. That’s what I’m doing right now for my portfolio.

Rising yield

One reason for that is because of the financial service stalwart’s dividend. A falling share price means a higher yield. As such, the stock currently has a thumping 9% payout.

That’s the third-highest on the FTSE 100. And it clears the index average 3.6% yield with ease. What makes it even better is that its dividend has been rising in recent years largely due to management’s actions.

In the last decade, its payout has climbed by over 80%. Given that dividends are never guaranteed, it’s actions like these that fill me with confidence when targeting stocks for passive income.

We’ve also seen management put emphasis on rewarding shareholders in more recent times. For example, the firm is set to end its five-year cumulative dividend plan this year. During that time, it would have returned nearly £6bn to shareholders through the scheme. This year, the board has signalled its intention to grow the dividend by 5%.

A bright future?

What I also like about Legal & General is that I think the firm is well-positioned to capitalise on trends such as the ageing UK population. In the next 25 years, predictions have the number of people older than 85 in the UK doubling to 2.6m.

With people living longer, there will naturally be a rise in demand for retirement, wealth, and protection products. Legal & General will benefit massively from this. It’s already a leader in areas such as the pension risk transfer market.

Issues along the way

That said, while I see long-term value in Legal & General, it won’t be a smooth journey for the business. Inflation and high interest rates still pose a challenge. While it may feel like we’re out of the woods, economic uncertainty is ongoing and presents a threat to the firm’s operations.

For example, a delay in future cuts would harm investor confidence, which could see customers pull their money out of funds. Over the past couple of years, the business has seen its assets under management (AUM) take a hit. Most recently, we saw this in the first half of the year, when total AUM for its asset management division fell by 3%.

Long-term outlook

But as a long-term buy, I’m bullish on the FTSE 100 stalwart. Its shares look decently priced, trading on a forward price-to-earnings ratio of just 9.1. Couple that with its meaty yield and future growth prospects, and I think Legal & General could be a shrewd buy. If I had the cash, I’d snap up some cheap shares today.

The post It’s down 8%, so would I be silly to ignore the cheap Legal & General share price? appeared first on The Twelfth Magpie.

More reading

• Just 9% of us can expect a ‘comfortable’ retirement! Could UK shares be the answer?
• 3 passive income shares to consider buying for a 7% yield
• How much would you need in an ISA to match the new State Pension and get another £12,547 a year?
• Here’s why Legal & General is still one of the UK’s most popular SIPP buys
• How have Legal & General shares become a dividend powerhouse? 5 reasons why!

Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

I’ve always been fascinated by the Lloyds (LSE: LLOY) share price. Despite looking cheap, for years the stock didn’t budge. But in recent times, it seems to have found a new lease of life.

The stock is now up 22.7% year to date. After posting this strong performance in 2024, that brings its total gains for the last 12 months to 31.3%.

Long-term shareholders are finally starting to see a return on their investment. The FTSE 100 bank is now up 7.4% over the last five years. Back then, I would have forked out 54.9p for a share. Today (26 September), I’d pay 59p.

But what could be next in store for the high street stalwart? After its impressive climb, does the stock have further to go? Let’s take a closer look.

Cheap as chips?

Assessing whether a stock has more growing room is a difficult task. After all, the stock market is unpredictable. Quite frankly, nobody knows what will happen. That said, looking at Lloyds’ valuation will provide a good insight into whether its share price could keep climbing.

To do that, I’m going to use the key price-to-earnings (P/E) ratio. Lloyds currently trades on a P/E of 8.4, which looks cheap to me. The FTSE 100 average is 11. So, to pay less than that for a business of Lloyds’ quality feels like a steal.

What’s more, its forward P/E is just 6.3. Again, going on that, it seems that even after soaring this year, Lloyds could keep up its momentum in the times ahead.

I can also use the price-to-book (P/B) ratio. This is a more common metric used to value banks. Right now, Lloyds currently has a P/B of just above 0.9, where 1 is considered fair value.

Challenges ahead?

So, I’d argue at 59p, the FTSE 100 bank still looks cheap. But it’ll most certainly face challenges in the months ahead.

The main one will be interest rates. We’ve now had our first rate cut in the UK. And we recently saw the Fed reduce rates by 0.5% across the pond. While overall falling rates will give investor sentiment a lift, this will harm Lloyds’ margins.

That’s because lower rates mean the bank can’t charge customers as much when they borrow money. We’ve seen this in effect already. During the first half of the year, the firm’s net interest margin fell from 3.18% to 2.94%.

On top of that, Lloyds is solely reliant on the UK for its revenues. Should the domestic economy stutter, that could impact the business.

Chunky yield

So, I’m expecting some volatility. But I’m content with riding some short-term ups and downs. That’s especially true since the passive income from Lloyds’ 4.9% dividend yield will tide me over. That’s above the FTSE 100 average of 3.6%. Last year, the firm upped its payout by 15% to 2.76p a share.

More to give?

Even after rising this year, I still see value in Lloyds shares. And if I had the cash today, I’d happily add the stock to my portfolio.

While I’m expecting its share price to experience some peaks and troughs, I see long-term value in the Footsie bank.

The post After rising nearly 23%, does the Lloyds share price have further to go? appeared first on The Twelfth Magpie.

More reading

• Are Lloyds shares 23% undervalued?
• How have Lloyds shares become a dividend investor’s dream? 5 reasons why!
• Here’s how much I think Lloyds shares will be worth at the end of 2027
• Lloyds shares look cheap around £1— but are investors overlooking the real story in the stock?
• Will axing this 174-year-old brand boost Lloyds’ share price?

Charlie Keough has no position in any of the shares mentioned. 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.