The FTSE 100 has had a strong start to the year, up around 5%. And as such, I’m on the lookout for FTSE 100 stocks I can buy this month.

Investors had a tough time in 2022 as the Russia-Ukraine conflict alongside red-hot inflation saw global markets take a hit. Yet despite this, the index flexed its strength, posting a slight gain for the year. In contrast, the S&P 500 saw a 20% fall.

Much of the same is expected in 2023. However, with the FTSE 100 posting a strong start, I have my eye on two stocks that I think would be solid additions to my portfolio. Let’s take a closer look.

Scottish Mortgage Investment Trust

The first on my list is Scottish Mortgage Investment Trust (LSE: SMT). Last year was a bleak time for growth stocks as investors shied away from these riskier investments. As a result, the Scottish Mortgage share price nosedived by 40%.

The trust has also got off to a slow start year to date, with its stock slightly down. However, I like the look of the Baillie Gifford fund as a long-term buy.

To start, as a retail investor, what I most like about Scottish Mortgage is the exposure I gain under one investment. The trust invests in over 100 companies, including unlisted firms, meaning I diversify my portfolio through owning it.

Scottish Mortgage is also currently trading at around a 15% discount to a net asset value of 835p per share, which signals that the fund is undervalued. This suggest that I can access its top holdings such as ASML and Tesla cheaper than their market rate. Clearly, this is a positive.

Despite this, it’s weighting to China has seen it underperform recently as the country has struggled with its ongoing battle with Covid-19. And on top of this, with interest rates set to be hiked further, the trust could take a hit given its focus on growth stocks.

However, with a long-term focus, and with the diversification it offers my portfolio, I like the look of Scottish Mortgage.

Next

Second on my list is retail giant Next (LSE: NXT). Unlike Scottish Mortgage, the stock has got off to a strong start in 2023, rising an impressive 15%.

One reason for this is that in January the business raised its pre-tax profit forecast by £20m to £860m. This was due to a rally in full-price sales in the nine weeks to the end of 2022.

The stock also looks cheap to me. It currently trades on a price-to-earnings ratio of 12. For a business of Next’s quality, I think this presents good value. Recently, it has also looked to expand, with its latest move being the acquisition of fashion company Joules.

The biggest threat for Next in the months ahead is rising costs and the potential for consumers to cut back on spending. However, as a strong brand with plenty of experience in the fashion retail industry, I’d be willing to snap up some Next shares.

The verdict

I don’t have the spare cash to buy these FTSE 100 stocks in March, otherwise, I’d be keen. Should this change in the near future, I’ll be looking to pick up both.

The post 2 cheap FTSE 100 stocks I’d be keen to snap up in March! appeared first on The Twelfth Magpie.

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• An AI beast just racked up 80-fold growth and is now a top holding in this FTSE 100 trust
• SpaceX doesn’t pay a dividend. So how come it may help these investors earn passive income?
• Scottish Mortgage shares are now even cheaper after SpaceX’s amazing stock market debut!
• Most Britons miss out on the first 20 years of investment compounding. Here’s how a Junior ISA or SIPP can change that

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

Lloyds (LSE: LLOY) shares have failed to excite in recent times, with the stock down over 20% in the last five years. Racing inflation and falling investor confidence in 2022 saw it continue to suffer as shares in the FTSE 100 bank fell 14%.

Despite this, 2023 has seen Lloyds rally. Up by 12%, a strong start to the year has seen it nearly reverse all its losses from last year.

So, is now the time to be snapping up Lloyds shares? I think so. Here’s why.

Why the rally?

One of the main reasons for the recent spike in the Lloyds share price is rising interest rates. With the Bank of England (BoE) recently hiking rates to 4%, Lloyds has benefited from this.

This is because higher rates allow the business to charge customers more when they borrow, in turn boosting net interest income. For Q3, its underlying net income was up 15%, fuelled by growth in the net interest margin. And with growth projected at 23% in net interest income for its upcoming Q4 results, it’s clear to see why investors have been keen on the stock year to date.

Looking ahead, while many think that interest rates are near their peak, it’s predicted that they could jump a further 25-50 basis points in 2023. With this in mind, the business looks set to continue to benefit in the months ahead.

Not all good news

While Lloyds stock has jumped this year due to the BoE’s attempts to curb inflation, rate hikes are a double-edged sword. Higher interest payments may see customers default on loan payments. Clearly, this is bad news for the bank.

Lloyds is also more susceptible to a weakening UK economy giving its greater domestic focus compared to its competitors. With the UK economy already in trouble, and with 2023 set to be choppy, Lloyds could suffer as a result.

Remaining positive

Despite this, I like the stock due to its dividend yield. Figures released yesterday revealed that inflation had eased for the third month in a row to 10.1%. With a 4% yield, while it’s not inflation-beating, the passive income generated from Lloyds stock offers me a partial hedge. With rates not set to come down to a more respectable level for the foreseeable future, buying Lloyds makes sense.

The stock also has a low valuation. With a price-to-earnings (P/E) ratio of around 8.7, this sits comfortably below the FTSE 100 average of around 14. It also has a forward P/E of just 7.

Should I buy?

I’ve been tracking Lloyds shares for a while. And I recently decided to bite the bullet and add the stock to my portfolio. Its low valuation and high dividend yield make it an attractive proposition. And despite the threat of a weak UK economy, hopefully, the gains seen from high interest rates will allow Lloyds to offset this.

When I last bought Lloyds stock, I thought I had enough exposure. However, with its upward trajectory and at its current price of around 53p, I still think it’s attractive. With this in mind, I’ll be looking to top up my holding in the weeks ahead.

The post Lloyds shares are up over 10% in 2023! Is it time to buy? appeared first on The Twelfth Magpie.

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• Is there any value left in Lloyds shares now they’re over £1?
• Prediction: this UK growth stock will outperform Lloyds shares over the next 5 years
• Barclays, NatWest or Lloyds shares: which is the better pick for a UK retirement portfolio?
• Here’s how much I think Lloyds shares will be worth by the end of 2027
• How to target a tax-free passive income of £1,275 a month on top of your State Pension

Charlie Keough 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.

The last month or so has seen Lloyds (LSE: LLOY) shares rally. Up around 9%, this has reversed some of the losses the stock has seen in 2022.

The shares have been hit this year with factors such as red-hot inflation weighing down investor sentiment. However, I think 2023 could be the year to buy. Here’s why.

Lloyds share price history

The last five years have been bleak for shareholders in Lloyds. Within this time, the stock has fallen around 30%, including a 42% fall in 2020 alone.

This year has told a similar tale. With inflation reaching 11.1% for October, investor confidence has plummeted. After falling below the 50p mark back in February, the Lloyds share price has failed to rise above it since. As we head into 2023, Lloyds investors will be hoping for a turnaround in fortunes.

Where next?

So, where does the stock go from here?

Let’s start by getting the potential headwinds out of the way. Firstly, we’re in a recession. And with Lloyds focusing on the domestic market, this makes it more vulnerable to the impacts of a weakening UK economy.

As one of the UK’s largest mortgage lenders, the weak property market will also have an adverse effect on Lloyds. With UK house prices predicted to fall 9% between now and autumn 2024, people may be deterred from buying new homes.

Not all down and out

Despite this, I think there are plenty of reasons to like Lloyds shares.

In the short term, Lloyds is set to benefit from higher interest rates. To curb inflation, the Bank of England has been hiking rates in recent times. Currently, the rate sits at 3%. And with predictions that the base rate could rise above 4% in 2023, this is a positive for Lloyds.

This is because higher rates allow the firm to charge customers more when they borrow from the bank. As a result of this, Lloyds saw its underlying net income up 15% in Q3, driven by growth in its net interest margin.  

What I also like about the stock is its attractive dividend yield. This currently sits at around 4.6%. And while this isn’t inflation-beating, it does trump the FTSE 100 average. With high inflation, the passive income stream created from this investment could come in handy in the months ahead.  

Lloyds also has a low valuation. With a price-to-earnings (P/E) ratio of 7.7, this sits well within the ‘benchmark’ 10 and highlights to me that the stock is undervalued. On top of this, it also has a forward P/E of 6.1.

While the bank could suffer as a result of an underperforming housing market, this could be offset by the moves it’s taken in the private rental market. Through the brand Citra Living, Lloyds plans to buy 50,000 homes by 2030.

Time to buy?

So, are Lloyds shares a buy? I’d say yes.

The stock will face headwinds in the short term. However, I see long-term potential. The rise we’re set to see in interest rates will benefit the firm. And its venture into the rental market looks promising. Its dividend yield and low valuation are a bonus. If I have some spare cash, I intend to buy Lloyds shares as we head into the New Year.

The post Are Lloyds shares a buy for 2023? appeared first on The Twelfth Magpie.

More reading

• Is there any value left in Lloyds shares now they’re over £1?
• Prediction: this UK growth stock will outperform Lloyds shares over the next 5 years
• Barclays, NatWest or Lloyds shares: which is the better pick for a UK retirement portfolio?
• Here’s how much I think Lloyds shares will be worth by the end of 2027
• How to target a tax-free passive income of £1,275 a month on top of your State Pension

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.

Yesterday, the Bank of England raised interest rates by 75 basis points (0.75%). This follows a similar move by the Fed in the US, 24 hours earlier. This is all in an effort to tame runaway inflation, which stands at a 40-year high. With predictions of a deep and protracted recession for the UK economy, should I consider selling my stocks and moving to cash?

Focus on the long term

The first thing I’m not doing is panicking. By historical standards, interest rates are still extremely low, particularly given the fact that inflation is running at 10%.

At the moment, central banks are trapped between a rock and a hard place. They know that if they raise rates too high and too quickly, both the economy and stock market are very likely to crash. However, if they take their foot off the interest rates accelerator pedal, then inflation could get completely out of control.

What’s concentrating the minds of market commentators is how long central banks are likely to keep raising rates before they begin to ‘pivot’. The theory goes that once such an announcement is made, then this will be the cue for stock markets to begin rising again.

As an investor with a long-term mindset, I find this exercise completely fruitless. What I continue to remain focused on is identifying stocks I wish to buy.

Value vs growth

In 2022, investors have been rotating out of growth stocks and into value ones. With the exception of Apple, the FAANG stocks are all heavily down. Meta, for example, is down 70% this year. Does this mean that I see value in such stocks?

What continues to make me nervous about technology stocks, is their valuations. Many of them are still priced for perfection. That’s why many growth stocks have fallen so heavily when they haven’t met analysts’ expectations. DocuSign is but just one example here.

In addition, the longer inflation remains elevated the more likely it is that tech stocks will continue to fall. This is because their present valuations are based on what the market expects their future cash flows to be worth. But when discounted back to the present day, the effects of inflation mean the cash flows aren’t worth as much.

Stock market crash

The truth is that I have no idea whether a stock market crash is on the horizon. And trying to time the market in the hope of predicting one is a recipe for disaster. Yes, there are storm clouds out there, but I also see a lot of value, particularly in the FTSE 100.

Commodities stocks look extremely cheap to me. Both BP and Shell have forward price-to-earnings (P/E) ratios in single digits. That’s despite them having a high degree of certainty with regard to their near-term cash flows.

Banking is another industry where I’m starting to see real value. Rising interest rates are pushing up their net interest income. That said, I’m less keen on banks whose balance sheets are more heavily weighted toward mortgage assets.

Despite all the doom and gloom, I remain optimistic. There are bargains to be had, it’s just a matter of looking for them.

The post As interest rates rise to 3%, is a stock market crash now inevitable? appeared first on The Twelfth Magpie.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Andrew Mackie has positions in BP and Shell. The Motley Fool UK has recommended Apple and DocuSign. 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 next few weeks are set to see businesses update investors with their latest results. And with the way 2022 has played out, it’s no surprise some firms have been posting sub-par results. With this in mind, I’m keeping an eye on Lloyds (LSE: LLOY) shares.

It’s been a tough year for the business. The grim economic outlook has seen its share price fall by 14% in 2022. Across the last 12 months, it’s down a slightly more respectable 12%.

However, with the stock currently trading for around 43p, I think now would be a good time to add it to my portfolio. Here’s why.

Lloyds profits slide

It hasn’t been the smoothest ride for long-term Lloyds shareholders. And yesterday this continued as the bank announced that its pre-tax profits for Q3 fell by over 25% to £1.5bn.

The fall was largely pinned to provisions for bad debts and loan losses. And with these jumping to £668m, this indicates that Lloyds is protecting itself against customers who may default on payments in the future.

The release saw the Lloyds share price slip in the early hours of the morning. That said, it recovered to finish yesterday slightly up.

Silver lining

The large drop in profits clearly isn’t what Lloyds shareholders wanted to hear. But it’s not all bad news. One major positive was the 13% rise in net income due to rising interest rates. With rates in the UK currently sat at 2.25%, this has allowed the firm to charge customers more when they borrow from the bank. With this, Lloyds was also able to increase its net interest margins.

As inflation continues to soar and show no signs of slowing down as we head into 2023, there have also been predictions that rates could be hiked to as high as 4% in the months and years ahead. Going forward, this will continue to provide a boost for Lloyds.

What I also like about Lloyds is the passive income stream I can create by buying the stock. With a FTSE 100 average-beating 5% dividend yield, the stock seems like a smart play in current times. Its low price-to-earnings ratio of seven is also an attractive factor.

Housing market slowdown

Lloyds also gave a bleak prediction for the future state of the UK housing market. And as of one the largest mortgage lenders, this may spell trouble for the business. It predicted that UK house prices will fall by 8% next year, followed by a long period of stagnation.

However, this could be offset by its new rental venture, Citra Living, and it has predicted that demand is set to increase across the next five years.

Why I’d buy

There’s no doubt in my mind that Lloyds shares will be a slow burner. However, as a Fool, a long-term approach to investing doesn’t faze me. The short term may be volatile for the business as the UK braces itself for a tough year ahead. However, with the bank set to benefit from rising interest rates, along with its substantial dividend yield, I think the stock is a smart buy. While I don’t have any spare cash right now, if I did, I’d happily buy Lloyds shares at their current price.

The post Are Lloyds shares still a buy despite falling profits? appeared first on The Twelfth Magpie.

More reading

• Is there any value left in Lloyds shares now they’re over £1?
• Prediction: this UK growth stock will outperform Lloyds shares over the next 5 years
• Barclays, NatWest or Lloyds shares: which is the better pick for a UK retirement portfolio?
• Here’s how much I think Lloyds shares will be worth by the end of 2027
• How to target a tax-free passive income of £1,275 a month on top of your State Pension

Charlie Keough 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.

It’s been a tough year for investors in Scottish Mortgage (LSE: SMT). Rising inflation as a result of supply chain issues, alongside the tragic war in Ukraine has seen the investment trust reverse some of the fine form that it’s produced in the past few years. In 2022, the Scottish Mortgage share price is down just shy of 40%. In the last 12 months, the trust has fallen nearly 45%.

It’s clear the next few months may be volatile when it comes to investing in the stock market. However, I think Scottish Mortgage shares, currently trading for well below 800p, could be a smart long-term addition to my portfolio.

The story so far

Scottish Mortgage made a name for itself back in 2020 when it rose an impressive 105% despite Covid-19 running rife on markets. However, since then, the trust’s growth has significantly slowed.

The main reason for its demise year to date is inflation. Rates have been on the rise across the globe. And as a result, markets have seen trillions wiped off their value. Inflation has at times been above 10% in both the US and the UK. And with rates showing no sign of slowing down, this could spell trouble for the Scottish Mortgage share price.

This is because during these volatile periods the worst affected assets are growth stocks, which Scottish Mortgage focuses on holding in its portfolio. Due to the volatility these stocks provide, investors tend to shy away from them during difficult times, instead switching to ‘safer’ alternatives.

Due to this, investors have been selling off their shares in the trust. With its top holdings including names such as Tesla and ASML, which are down 40% and 38% this year, it’s clear to see why Scottish Mortgage has suffered.

Is it time to buy?

Despite this, I think now may be the perfect time for me to buy the stock.

Firstly, the investment style adopted by its management team is one I can relate to. By this, I mean buying for the long hold.

Performance is measured over a five-year+ period, meaning the volatility that can be seen in the markets right now shouldn’t pose a threat. While past returns are not an indication of future performance, the last five years have seen the trust return an impressive 80%.

On top of this, I also like the diversification I get through buying Scottish Mortgage shares. As a retail investor, I get access to over 100 companies all through a single investment. For me, this is perfect.

One issue is its weighting to China. With some cracks beginning to appear in the country’s economy, this could leave the trust exposed. On top of this, as inflation rises in the months ahead, the trust may also see its price take a hit.

With this said, I’d happily open a small position in Scottish Mortgage today. Its focus on growth stocks combined with its long-term approach leads me to think I could see some healthy returns in the years ahead. I also think its weighting in China will bear fruit in the long run.

The post The Scottish Mortgage share price is below 800p! 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 ASML Holding. 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.

Lloyds (LSE: LLOY) shares have plummeted this week. With the stock down around 17% in 2022, it has fallen by 9% in the last five days alone.

The business has been a victim of the large drop we’ve seen in global markets in the last few days as a piling up of pressures continues to worsen the economic outlook.

However, I’d rush to add the FTSE 100 bank, currently trading for 41p, to my portfolio. Here’s why.

The story so far

Clearly, it’s been a tough year for Lloyds. Inflation has been on the rise. And as such, investors have lost confidence in the market. Rates have been above 10% in the UK and the US at times this year. And as a result, the FTSE 100 is down by over 8% in 2022.

The last five years have also followed a similar trajectory for Lloyds stock. In September 2017, a share in the bank would’ve cost around 68p. Today, it’s 40% lower.

Not all bad news

Despite its poor performance, I think now is a great time to load up on some shares.

The first reason for this is rising interest rates. To fight back against spiking inflation, the Bank of England has been hiking rates. Last week saw the central bank set the rate to 2.25%, a 50 basis points rise. There’s also large speculation that it could reach nearly 6% come next spring.

For Lloyds, this is a positive. This is because higher rates will allow the firm to charge customers more when they borrow from the bank. In turn, the firm will be able to increase net interest margins.

On top of this, I also like the stock because of its low valuation. It currently trades on a price-to-earnings ratio of 6.8, sitting well below the ‘benchmark’ of 10 and the average of its FTSE 100 peers.

Racing inflation also means I’m looking to create streams of passive income. With its 5.1% dividend yield, Lloyds offers this.

Lloyds concerns

With this said, there are a few issues I have with the stock.

Firstly, should interest rates reach as high as predicted, customers are more likely to default on payments.

On top of this, with its sole focus on the domestic market, Lloyds is more prone to the impacts we’re set to see as the UK economy weakens. The impact of the next few months could set Lloyds back in the near term.

As one of the UK’s largest mortgage lenders, the weakening housing market may also spell trouble for the business.

However, its new rental venture, Citra Living, will help it to offset risk through this diversification.

Why I’d buy

So, while the short term may be rocky for Lloyds, I see long-term value in the bank’s shares. The rise we’re set to see in interest rates will benefit it. And with its high dividend yield and low valuation, I think the stock is a smart buy below 45p. I’d happily add Lloyds shares to my portfolio today.

The post Lloyds shares are below 45p! Here’s why I’d rush to buy appeared first on The Twelfth Magpie.

More reading

• Is there any value left in Lloyds shares now they’re over £1?
• Prediction: this UK growth stock will outperform Lloyds shares over the next 5 years
• Barclays, NatWest or Lloyds shares: which is the better pick for a UK retirement portfolio?
• Here’s how much I think Lloyds shares will be worth by the end of 2027
• How to target a tax-free passive income of £1,275 a month on top of your State Pension

Charlie Keough 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.

The trajectory of BT (LSE: BT-A) shares will no doubt have been leaving investors feeling gloomy in recent times.

The telecommunications giant is a FTSE 100 stalwart. And while it’s failed to excite for a while, I think its current price could be appealing. Here’s why.

BT share price history

Let’s start by assessing the performance of the stock.

Looking at the BT share price across the last five years isn’t pretty reading. Since then, its share price is down over 50%. The stock flirted with the 300p mark back then. Today, a share costs just 140p.

The last year has told a similar tale. In this time, it’s down 9%. And these losses have only continued in 2022.

The main reason for this is inflation. Rates going higher have seen investor confidence in the market go lower. While BT isn’t alone in its struggles as this year has seen a monumental amount wiped off global markets, it’s still not good news for shareholders.

On top of this, the business has also been in the news following staff strikes. The firm had been embroiled in discussions with the Communication Workers Union regarding calls for a pay rise amid the cost-of-living crisis. But BT’s offers haven’t satisfied the union.

Not all down and out

It’s clear to see BT has faced headwinds. However, I see potential with the stock.

Firstly, its dividend yield will most certainly come in handy during these times. For the year ended March 2022, its payout totalled 7.7p per share. At current levels, that equates to a 5.5% yield. And while it’s not inflation-beating, it offers me a greater hedge against inflation than the FTSE 100 average.

Another enticing factor is a potential takeover by French billionaire Patrick Drahi. He currently owns an 18% stake in the firm. And with the UK government providing Drahi an unexpected all-clear regarding his stake, this could open the door for a takeover attempt in the months ahead. This would provide the BT share price with a boost.

Of course, I don’t buy solely based on speculative factors such as a takeover that may or may not happen. You see, I also think there’s long-term value in the stock.

What I like about BT is the large infrastructure it already has in place. This provides it with some higher degree of pricing power. This was seen with raised prices for broadband and mobile contracts boosting its sales in the last quarter. With the continuous expansion of its Openreach network, which now reaches 8m homes and businesses across the UK, I think BT has solid foundations to excel.

My biggest concern is its debt. As of 30 June, its net debt stood at £18.9bn, which is a monumental sum. With interest rates rising, and with further hikes expected, this will make the debt harder to eradicate.

Is now the time?

So, is now a good time to load up on some shares?

I’d say yes. It’s been a tough year for BT. And I’d expect it to face further headwinds. While I have no spare cash right now, if I did I’d open a small position in the stock today. Its large infrastructure provides it with an edge. And its dividend yield and a potential takeover are also a draw.

The post Is now finally the time to load up on BT shares? 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.

Lloyds (LSE: LLOY) shares are on a surge. Despite being down 9% year to date, this week the stock is up around 6%. The last 12 months have seen it rise by 7%.

In times gone by, a share in the FTSE 100 bank would set you back as much as 65p. Today a share costs just over 45p.

For this price, I’d rush to add Lloyds shares to my portfolio. Here’s why.

Lloyds share price history

Before we start, let’s take a look at why the Lloyds share price has fallen in the last few years.

The stock entered 2020 trading at 63p. However, with the pandemic causing markets to fall across the globe, the year saw Lloyds stock drop 42%, and at times to as low as 25p.

Since then, it has made small recoveries but has failed to sit above the 50p mark for a noticeable period.

With racing inflation, this year has told a similar tale. Consumers are tightening their belts and markets are losing value as rates continue to rise. Recently, it was predicted that inflation could spike to as high as 22%.

Why I’d buy

So, with such a bleak outlook, why would I buy Lloyds shares?

Well, the first reason is rising interest rates. To counteract rising inflation, the Bank of England has been hiking rates. Its most recent hike was to 1.75%. However, there have been predictions this could go as high as 3%-4%.

For Lloyds, this is good news. And this is because the firm can charge customers more when they borrow from it. Its net income rose 12% in the first half of the year, with interest rates likely playing a part in this. It also saw its net interest margin increase as the firm raised its outlook for the year.

With this said, it’s not just the potential of higher interest rates that attracts me. The stock currently trades on a price-to-earnings ratio of 7.5. This is below the ‘benchmark’ of 10. And to me this signifies that Lloyds is undervalued.

A smart play with rising inflation would also be to create a stream of passive income. And with a dividend yield of 4.7%, Lloyds offers this.

Lloyds concerns

Even with this, there are a couple of factors that are of concern.

While rising interest rates are positive, they could also see customers default on their payments. For Lloyds, this would clearly be bad news.

On top of this, as one of the UK’s largest mortgage lenders, Lloyds could also be affected by the UK housing market showing signs of a slowdown. In its latest results, homebuilder Barratt Developments said that the number of homes being reserved was now below pre-pandemic levels. As a result, it expects house price growth to slow.

However, I’d still buy Lloyds shares today. The inevitable rise in interest rates will benefit the bank. And with its low valuation and dividends, the stock would be a strong addition to my portfolio. While a housing market slowdown may pose a threat, I think the moves Lloyds is making in the rental market will help offset this. For 45p, I’d rush to buy.

The post I’d rush to buy Lloyds shares while they’re still under 50p! 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 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.

It’s been a tough year or so for investors. Red hot inflation has caused global turmoil. And with a Covid-19 hangover and the tragic war in Ukraine also weighing down on sentiment, it’s no surprise people are fearing a stock market crash.

Despite these fears, I’m staying calm. With the threat of markets tumbling in the months ahead, here’s what I’d do should the market plunge.

The story so far

Before we delve into what I’m doing, let’s start by taking a look at what’s been going on recently.

As mentioned, the reason markets have suffered this year is a result of the macro economy. Inflation has hit 40-year highs in both the UK and the US, jumping above single figures in the UK for July. And while the FTSE 100 is down nearly 3% year to date, the S&P 500 has been as low as $3,636, signifying a 23% year-to-date loss.

Despite these losses, markets made a small rebound from July following the news that US month-on-month inflation fell between June and July. Clearly, investors were beginning to regain confidence.

However, with dire predictions for inflation rates being released by the likes of Goldman Sachs and Citi, it seems the months ahead could be rocky. While Citi warned that UK inflation could reach 18%, stating that the UK energy price cap could reach nearly £6,000 by April 2023, Goldman also recently predicted inflation could peak to as high as 22% should gas prices continue to soar. There’s no doubt this would see a crippling downturn in the stock market.

Remembering my goal

So, with the threat of a market crash on the horizon, what would I do?

First of all, I’d remember how I invest. And that’s for the long term. Within the stock market there are many different types of investors, be it day traders or hedge funds. But as a Fool, I purchase stocks with the aim of achieving some healthy returns in the long run.

What this essentially means is that the turbulence we’re experiencing in the market right now shouldn’t scare me into selling my positions. Volatility is inevitable. And therefore, I need to remember that if I’m patient, my long-term plan of building wealth should bear fruit.

Grasping opportunities

With this said, this doesn’t mean that I should steer clear of the markets. And in fact, what I’d do is the opposite!

A stock market crash presents a great opportunity for me to grab some bargain companies with strong fundamentals. And should stocks fall further, I have a list of companies I’d look to add to my portfolio. This includes the likes of companies such as BT and Lloyds, who have already seen their share prices suffer this year.

Whether a stock market crash occurs in the near future is unknown. And there’s no telling to what extent inflation can continue to rise. However, with my long-term outlook and a keen eye for undervalued investment opportunities, I’m not panicking any time soon.

The post Here’s what I’d do in a stock market crash! appeared first on The Twelfth Magpie.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Charlie Keough 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.