It seems like forever that the Lloyds (LSE: LLOY) share price has been sitting around the 40p mark. But after a strong recent performance, it currently changes hands for 47p.
As a shareholder, I’m happy to see the share price rising. In the last five years, the stocks seen over 7% shaved off its price. It’s bounced back a bit in the past year however, rising by nearly 5%.
In the last month alone it’s seen double-digit growth. This raises two questions: will this continue in 2024? And should I be rushing to buy more shares?
What next?
Where Lloyds goes in 2024 is anyone’s guess. The stock market is volatile. And as much as I wish I could see into the future, I can’t.
The Black Horse Bank’s stock has traded in a wide range in the last year. At its cheapest, I could have snapped up a share for 39p. Back in February, I would have forked out 54p.
That aside, I’m hoping for a positive 2024. And there are plenty of reasons to be bullish.
To start, the stock looks undervalued. It trades on a multiple of six times earnings. That’s half the FTSE 100 average. Its price-to-book ratio, which compares a stock’s price relative to the value of its assets, is 0.6.
Extra cash
I’m also a massive fan of the passive income opportunity with Lloyds. I plan to buy income stocks and reinvest the dividends. Over the long run, I know this will help me build my pot quicker.
Lloyds yields 5.3%, which again is above the Footsie average (4%). Granted, dividends are never guaranteed. We only have to look at events such as the global financial crash of 2008 or the pandemic to see that. However, covered three times by earnings, it looks safe for now.
Hold your horses
While I’m bullish on Lloyds, I’m wary of a few issues.
It’s heavily exposed to the UK. And where many of its competitors have overseas operations, Lloyds doesn’t. This means its performance is closely tied to the UK economy. Any signs of domestic weakness could see its share price fall.
The same applies to the housing market. As Britain’s largest mortgage lender, any volatility could harm the firm. High interest rates will dent mortgage demand. That could prove to be an issue.
Interest rate impact
Speaking of interest rates, while I can’t predict the future, I’m certain the Bank of England’s actions in 2024 will influence Lloyds’ performance.
On 14 December the Bank held the base rate at 5.25% as its governor Andrew Bailey said that there’s “still some way to go” to bring down inflation. Higher rates can boost the firm’s net interest margin as it allows it to charge customers more when they borrow. On the other hand, it can also mean higher impairments as customers fail to keep up with their payments. This will be one to watch closely.
Time to buy?
So, is it time to buy? Well, I’d say so. I’m not expecting much growth from the UK economy in 2024. And the Lloyds share price may stagnate as a result. However, I’m bullish on the long-term outlook. At its current price, I’d be keen to buy if I had the cash.
The post The Lloyds share price rises above 45p! Is this my time to buy? appeared first on The Motley Fool UK.
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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.
