Lloyds (LSE:LLOY) shares have been on a rampage lately. Over the last 12 months, the stock has enjoyed a 52% rally, climbing to its highest point since 2018. To put that into perspective, a £5,000 investment in March 2024 is now worth £7,600. That’s not bad, considering the FTSE 100 is only up 15% over the same period.

But looking at the business today, can the Lloyds share price continue to climb from here? And how much money could investors make over the next 12 months if they buy £5,000 worth of shares right now?

What’s behind the momentum?

Despite the Bank of England beginning to cut interest rates, Lloyds has continued to deliver fairly robust earnings for shareholders. Overall, the net interest margin for 2024 still dropped, but in the second half of the year, some improvements emerged.  

With excess capital at hand and a relatively cheap-looking valuation, management took the liberty of launching a £1.7bn share buyback scheme as well as boosting dividends by a welcome 15%.

At the same time, more cash could soon be flooding the balance sheet as management reduces its target CET1 from 13.5% to 13% by the end of 2026. This effectively reduces the amount of reserves Lloyds has to hold in case of an economic crisis. A 0.5% reduction doesn’t sound like much. But for a bank like Lloyds, it roughly equates to £1.1bn in extra capital to work with each year without compromising depositors should the economy decide to throw a tantrum.

Needless to say, this is terrific news for shareholders. And seeing positive upward momentum in Lloyds shares makes sense.

Where do I think the Lloyds share price will be in a year?

Forecasts are notoriously tricky to get right. But looking at the latest analyst projections, if everything continues to go well for this business, Lloyds shares could sit at around 90p by this time next year. In this scenario, a £5,000 investment today would grow to £6,220.

However, not everyone is convinced, with one analyst projecting that shares could tumble back down to around 60p over the same period. If that were to happen, then a £5,000 investment today could actually drop to a value of just £4,150.

So, which projection is correct? The uncertainty surrounding the near-term performance of Lloyds shares largely boils down to the upcoming court case regarding undisclosed motor finance commissions.

Management had previously set aside £450m to cover the cost of settling the scandal should the Supreme Court rule against the bank. However, in the latest results, this reserve was increased to £1.15bn. And some analyst projections indicate that the actual cost could be even higher.

Time to buy?

At a price-to-earnings ratio of 11.6, Lloyds is by no means an ‘expensive’ stock, even after its recent rally. However, its fate, at least in the short term, appears to be tied to the upcoming court ruling in April.

Investing in businesses that lack control over their own destiny isn’t something I’m particularly keen on for my portfolio. Therefore, I’ll be sitting on the sidelines for this one. Instead, I’m searching for other opportunities within the financial sector that don’t have such a large cloud of uncertainty hanging over their heads.

Looking across the FTSE 100, investors are seemingly spoilt for choice when it comes to finding high dividend yields. Among these opportunities sits UK homebuilder Taylor Wimpey (LSE:TW.). Since October 2024, the stock has suffered a pretty significant 32% drop in valuation. Yet the dividends have continued to flow, resulting in a pretty attractive 8.5% yield for income investors.

Typically, seeing yields this high is a giant red flag. But that’s not always the case, and there are a few rare exceptions that go on to unlock jaw-dropping wealth for smart investors. So, is Taylor Wimpey one of these exceptions?

The state of Britain’s housing market

It’s no secret that the UK isn’t building enough homes. So, when Labour announced its plans to cut the red tape surrounding homebuilding, there was understandable excitement among investors that saw the entire sector rise on the election results last year. However, within a few short months, that excitement started to fade away.

Why? Because these businesses started reporting results. And they didn’t exactly contain the rebound everyone was seemingly expecting.

It turns out that even with easier-to-acquire planning permission, home affordability remains problematic in the current mortgage rate environment. That’s been made clear in Taylor Wimpey’s latest results, which reported fewer home completions and lower average selling prices.

As a consequence, the group’s profit for 2024 came in 37% lower than 2023 at £219.6m from £349m. Earnings volatility is to be expected in a cyclical industry like housing. But what’s more concerning is £335m of dividends was paid. In other words, management has been dipping into its cash reserves to afford its shareholder payout — not good.

Incoming dividend cut?

Despite the concerning decision by management to pay out more than it can afford, a dividend cut isn’t guaranteed to happen. As economic conditions slowly improve, mortgage rates fall, and material costs shrink, Taylor Wimpey’s margins could be set to improve.

Such a recovery could also be supercharged if the government continues to flirt with the idea of introducing a variation of its predecessor’s Help to Buy scheme. After all, this scheme accounted for approximately half of Taylor Wimpey’s sales in 2020. And with a landbank of 79,000 plots, the firm certainly has the capacity to capitalise on such a policy.

In other words, Taylor Wimpey could be a screaming bargain today. However, that all depends on whether activity within the UK housing market starts to ramp back up, either organically or through stimulative government policy. If the recovery ends up being sluggish, then there’s only a limited supply of cash available to maintain today’s 8.5% dividend yield.

As of December 2024, the group has around £565m of net cash left on the balance sheet, down from £678m a year ago. And operating profits for 2025 are currently expected to reach £444m, up from £416m in 2024. But overall, there’s a lot of uncertainty surrounding this enterprise. And with other high-yield income opportunities to pick from, investors may want to consider looking elsewhere until Taylor Wimpey’s position is clarified.

The S&P 500 has been on a phenomenal run over the last two years. Sure, the performance pales in comparison to some blockbuster tech stocks like Nvidia (NASDAQ:NVDA). However, compared to the historical average return of 10% per year, S&P 500 index investors have been reaping enormous gains lately.

When factoring in dividends, the US’s flagship index has generated a 56% return since March 2023. That’s a 24.9% compounded annual return, beating even Warren Buffett’s already impressive average of 19.9% per year.

That means if an investor had put £10,000 to work in an index fund, they’d be sitting on a portfolio worth £15,600 today. The same investment in the UK’s FTSE 100 would only be valued at around £12,500 over the same period.

Digging into the details

Much like the FTSE 100, the S&P 500 is a market-cap-weighted index. That means the larger a company is, the more influence it will have over the performance of its parent index. And in recent years, that’s started to create some portfolio concentration issues even among index investors.

Just five companies in the index, Apple, Nvidia, Microsoft, Amazon, and Meta Platforms, account for 25% of it by weight. So, when these companies do as well as they have done, index investors reap the benefit. Unfortunately, the opposite is also true. It’s why the S&P has taken a bit of a hit in recent weeks. Shares of Nvidia dropped by almost 20%, Meta Platforms fell by 11%, and Amazon is down 15%.

What’s going on?

With so many factors influencing the stock market in the short term, it’s impossible to pinpoint the exact cause of recent turbulence. However, the general consensus among investors appears tied to the impact of new trade tariffs being imposed by the US.

In the case of Nvidia, most of its chips are made in Taiwan. However, the group also has some manufacturing activities in Mexico. These are expected to be affected by the 25% tariffs on Mexican imports.

It doesn’t help that management was unable to clarify their expectations in the latest earnings report. It said” “Tariffs at this point, it’s an unknown until we understand further what the US government’s plan is.” And when a stock is trading at a premium valuation, such uncertainty unsurprisingly triggers volatility.

Time to buy?

Volatility often creates opportunities for investors who are comfortable taking on risk. The threat of tariffs cannot be ignored. However, in the long term, well-run companies will eventually adapt to shifting macroeconomic and geopolitical landscapes.

Having said that, when looking at Nvidia, the shares continue to trade at a lofty valuation with a price-to-earnings (P/E) ratio just shy of 40. In other words, even with all the recent volatility, the tech stock is still expensive. The same is true for the S&P 500 as a whole.

The index’s average P/E ratio sits at 29.7 versus its historical average of 18, suggesting that most of its largest constituents have a lot of catching up to do to justify their current valuations.

Therefore, all things considered, I’m preparing for volatility in the short term, looking to snap up bargains when they appear. After all, the long-term potential of these leading enterprises still looks promising in my eyes.

The FTSE 250’s predominantly known for its small- and mid-cap growth opportunities, but the UK’s second-largest index is also filled with ample income opportunities. And among them, Foresight Solar Fund (LSE:FSFL) currently stands out, thanks to the stock’s impressive 10.3% yield.

Like many renewable energy infrastructure funds, the last couple of years haven’t been kind to Foresight. The high-cost nature of its assets requires a lot of debt to acquire making the new higher interest rate environment less than ideal.

Subsequently, the business has seen its market-cap shrink by almost 35% since the start of 2023. Yet, shareholder dividends have kept flowing and growing. So is this a bargain in disguise for long-term-focused income investors?

A sustainable double-digit yield?

As a quick reminder, Foresight Solar owns a collection of solar and battery storage assets across the UK, Spain, and Australia. However, management’s currently in the process of divesting the latter.

The business model’s simple. Foresight generates clean electricity, sells it to energy suppliers, and uses the cash flow to service its debts, with the rest largely passed along to shareholders.

Given electricity is in constant demand and prices move roughly in line with inflation, Foresight’s dividend has done the same, allowing shareholders to earn what’s effectively an inflation-linked income stream.

The continuous stream of cash flow with relatively high margins, thanks to low fixed costs, are welcome traits for a dividend-paying investment. And on the surface, owning shares of Foresight Solar seems like a no-brainer. So why’s the stock price moving in the opposite direction to the dividend?

Risk of renewables

From an operational standpoint, Foresight’s almost entirely at the mercy of the weather, which hasn’t been great lately. In fact, the UK Department for Energy Security and Net Zero has revealed that 2024 had the lowest number of sun hours since Foresight’s IPO.

For reference, the average number of sun hours a day over the last 20 years sits at 4.4. But in 2024, Britons only enjoyed 3.8 hours, down from 4.3 in 2023 which, in turn, was down from 4.9 in 2022.

Looking over to the financials, the burden of rising interest rates is also causing some concern. For the most part, management’s successfully hedged against the risk of higher interest expenses by entering interest rate swap contracts.

However, when combining higher interest rates with less sun, Foresight’s asset portfoli’s losing market value, resulting in its gross asset value (GAV) tumbling from £1.3bn at the start of 2023 to £1.05bn at the end of 2024. With that in mind, it’s not surprising the stock price has subsequently fallen by a similar amount over the same period.

Time to buy?

All things considered, Foresight Solar looks like a promising candidate for a long-term income portfolio today. The risk of bad weather is something investors will have to consider. However, from a financial standpoint, management seems to be positioning the firm well to withstand the less-than-favourable macroeconomic environment.

My portfolio already has sufficient exposure to renewables, so this isn’t a stock I intend on buying right now. However, for investors seeking exposure to this sector and happy to wait for a recovery, Foresight may be worth a closer look.

The FTSE 100 has a reputation for offering defensive, high dividend-yielding stocks for passive income investors. However, it’s not every day that investors get the opportunity to lock in a 10.3% dividend yield.

Right now, Phoenix Group Holdings (LSE:PHNX) currently offers the largest shareholder payout in the UK’s flagship large-cap index. And what’s more, management’s still hiking dividend payouts. Is this too good to be true, or is it a screaming buy for UK income investors?

A bright-looking future

Insurance may not be the sexiest industry out there, but for Phoenix shareholders, it’s proving to be a lucrative one. Today, the firm has a market capitalisation of £5.2bn. That’s actually towards the lower end of its 10-year range when looking at the historical stock price chart. However, dividends have been flowing and growing throughout this period, more than offsetting the stagnant share price return.

Looking at the latest analyst forecasts, it seems opinions are relatively bullish, with earnings expected to expand over the next two years. All being equal, that paves the way for even higher dividends.

In fact, the current consensus predicts that the full-year dividend for 2024 will reach 54.14p before climbing to 55.7p in 2025. When compared to the current share price, that places the forward dividend yield at a staggering 10.6%.

That means for every £10,000 invested in this FTSE 100 stock, investors are expected to earn £1,060 in dividends each year. Needless to say, compared to a 3% interest rate on a savings account, that’s quite a substantial difference.

So why aren’t more investors capitalising on this opportunity?

Nothing’s risk-free

As is the case with every stock, even those in the FTSE 100, Phoenix’s dividend future is far from guaranteed. This is especially true given the firm’s currently in the middle of transitioning towards a broad-based pension provider from a speciality provider.

In other words, Phoenix is entering a new space in the insurance market for the first time. While this move does open the door to new long-term opportunities, it also exposes the group to fierce competition from rivals like Aviva – a company with far more experience and resources to protect its market share.

This uncertainty appears to be giving a lot of institutional investors pause. After all, it’s unknown whether Phoenix’s new strategy will be a success or cause the insurance giant to fall flat on its face, taking its impressive dividend yield with it.

Personally, I’m erring on the side of caution and waiting to see more progress in the transition. That could mean I might be missing out on a rare opportunity to secure a sustainable double-digit yield.

But with other lower-risk, high-yielding income opportunities to pick from, that’s a decision I’m happy to make.

Berkshire Hathaway (NYSE:BRK.B) shares are up 3.65% over the past month. It’s not a massive outperformance, but the S&P 500 is down 4.8% over the same period. However, £10,000 invested in the Warren Buffett company one month ago would now be worth a little less than £10,000 because of the appreciation of the stock has largely been wiped out by the appreciation of the pound.

And while we’re here. That’s a lesson worth remembering. When investing in non-UK-listed stocks, investors should note the forex forecasts. It’s actually one the reasons I resisted investing in US stocks when the pound hit parity with the dollar over two years ago. Although this did mean I missed out on attractive entry points for Nvidia and Tesla.

Why is Berkshire winning?

One of the main reasons for the 3.65% uplift in Berkshire Hathaway shares is its strong Q4 performance. It saw a 71.3% surge in operating earnings to $14.53bn. This capped off a year in which operating earnings rose 27% to $47.44bn, showcasing the resilience and profitability of its business portfolio.

The insurance segment was a standout, with pre-tax underwriting earnings more than doubling to $7.81bn, driven by higher premiums and improved underwriting discipline. Insurance investment income jumped 48% to $4.1bn, benefiting from rising interest rates.

Berkshire’s energy business also contributed significantly, with after-tax earnings increasing 60% to $3.73bn. Despite challenges in its railroad operations, where BNSF saw a slight 1.1% decline in earnings due to labour and litigation costs, the overall strength of its core businesses has reassured investors.

Finally, investors were clearly interested by the company’s cash pile which reached a record $334.2bn during the period. This truly huge cash pile provides stability and the potential for strategic investments or share buybacks. This combination of robust earnings, defensive business lines, and financial flexibility has bolstered investor confidence, driving the recent uptick in Berkshire’s share price.

Intriguing cash position

Berkshire Hathaway’s cash position is undoubtedly intriguing investors and in some respects, it represents a port of safety in an increasingly volatile market. This also leads us to ask what will Buffett do with all this cash, which represents around 30% of the holding company’s market cap. In the past, Buffett has used capital wisely in times when the market may be in reverse gear or investor sentiment is low. Amid the current volatility and pullback in certain areas, Berkshire could be very well positioned for takeovers or opportunistic share purchases.

Investing in America

Buffett’s top stock holdings are American stalwarts. And in all honesty, I don’t love the companies Berkshire Hathaway is investing in. In fact, I own none of Berkshire Hathaway’s top 10 holdings. All of the companies come with their own specific risks and in addition, investors may be wary about the volatility being witnessed among US stocks. President Trump’s trade policy coupled with pullbacks in government spending will undoubtedly create more turbulence on the way. Some investors may not like that.

Nonetheless, I recently added Berkshire Hathaway to my portfolio. I believe the huge cash pile will offer some protection against volatile US markets. Moreover, at 12 times earnings — admittedly price-to-earnings isn’t the perfect metric for a holdings company — coupled with unrealised stock gains and huge cash reserves, it’s an attractive proposition for me.

Rolls-Royce (LSE:RR) shares have surged 32% over the past two weeks. That’s truly phenomenal and it means the shares are now up 808% over three years. It’s an incredible turnaround and it shows us that multibaggers — stocks that at least double in value — well and truly exist on the FTSE 100. So, this means that £10,000 invested in Rolls-Royce shares two weeks ago would now be worth £13,200.

What’s behind the surge?

Rolls-Royce shares have leapt over the past two weeks due to a combination of strong financial performance, strategic announcements, and broader market trends. On February 27, the company reported a 55% increase in underlying operating profit to £2.5bn for 2024, driven by growth in its civil aerospace, defence, and power systems divisions. The firm also reinstated dividends at 6p per share and announced a £1bn share buyback, marking its first dividend since the pandemic.

The company upgraded its mid-term guidance, targeting underlying operating profit of £3.6bn-£3.9bn and free cash flow of £4.2bn-£4.5bn by 2028, which boosted investor confidence. CEO Tufan Erginbilgic emphasised the transformation of Rolls-Royce into a high-performing, competitive business, with significant improvements in margins and cash flow.

Additionally, the defence sector rallied in early March, with JPMorgan raising its target price for Rolls-Royce to 900p, citing a European “rearmament cycle” and increased defence spending. This sentiment was further bolstered by announcements from Denmark, the UK and Germany regarding significant boosts to their defence budgets, which are expected to benefit Rolls-Royce’s defence division.

Overall, Rolls-Royce’s strong financial results, shareholder rewards, and favourable market conditions in the defence sector have driven its stock price to record highs. It’s a far cry from the situation the stock found itself in during Liz Truss’s premiership — it wasn’t her fault — with the shares changing hands for around 60p each.

A valuation conundrum

Rolls-Royce’s forward price-to-earnings (P/E) ratio of 31.5 times suggests the stock may appear expensive compared to the broader market, particularly as it exceeds the FTSE 100 average. However, Rolls-Royce operates in a niche aerospace and defence sector with few direct peers, which limits meaningful comparisons. General Electric (NYSE:GE), a key competitor, trades at a higher forward P/E of 33.3 times, indicating that Rolls-Royce’s valuation isn’t an outlier in its industry.

The elevated P/E ratio reflects investor confidence in Rolls-Royce’s growth trajectory, driven by its strong recovery post-pandemic, upgraded mid-term guidance, and strategic initiatives like dividend reinstatement and share buybacks. Analysts project robust earnings growth, with a compound annual growth rate (CAGR) of 28.1% over the next three to five years, supported by rising defence spending and operational improvements.

As with every time the Rolls-Royce share price jumps, I’m holding my position until I’ve thoroughly reassessed the value proposition and judged market sentiment. What’s more, with my investment up six times, it’s already a sizeable part of my portfolio. As such, adding more may introduce some concentration risk.

Moreover, despite the fact that business is currently booming, we know that Rolls-Royce is quite reliant on earnings from the civil aviation segment. The pandemic highlighted this very acutely, with some suggesting the business could actually go under. Another grey swan event like the pandemic would be unfortunate but investors should always be wary.

Last week was another blockbuster for the FTSE 100 index of leading shares. The blue-chip benchmark hit a new all-time high. It has increased 13% over the past year.

Despite the strong performance of the index overall, some of the companies in it continue to look like potential bargains to me.

Associated British Foods

As an example, consider Associated British Foods (LSE: ABF). I added it to my portfolio recently.

I reckon the current valuation looks cheap. After a 16% price decline over the past year, the FTSE 100 member now trades on a price-to-earnings ratio of less than 10.

I do see risks. Sugar pricing this year is expected to be weak, eating into profits. The company’s Primark clothing business is operating in an environment where it is squeezed on one front by cheap rivals like Shein and on the other by an increasingly complex (and therefore costly) global supply chain.

But Primark on its own strikes me as a great business. Add to that other brands ABF owns like Twinings and Dorset Cereals and I reckon the profitable business looks like a bargain at its current price.

JD Sports

Another retail operator that has been feeling the heat is JD Sports (LSE: JD).

After a great few years of stock market performance, the going has got a lot tougher for JD Sports. The FTSE 100 retailer has seen its share price crash 33% over the past year.

Multiple profit warnings have shaken City confidence in management. Add to that the expense of an ambitious shop opening programme and a risk that weak consumer confidence could hurt spending on branded sportswear and the price fall makes some sense.

Still, the company has a proven formula and global reach, and is solidly profitable. It expects to deliver full-year profit before tax and adjusting items north of £900m.

Set against that, I reckon its £4bn market capitalisation is a bargain in plain sight.

How I think about the FTSE 100

What is going on?

How can individual FTSE 100 members be doing so poorly when the index itself has been going gangbusters?

It is like a cricket team or model railway club: overall it may be doing well, but individual members might be doing poorly. But for them, the overall performance would be even higher.

I could invest in a FTSE 100 tracker fund to try and benefit from the long-term potential I see for the index. Instead, though, I have been buying individual FTSE shares like ABF and JD Sports.

While their recent share price performance has been lacklustre to say the least, I remain upbeat about their long-term potential.

By pouncing now, at what I see as bargain basement valuations, I hope that my buy-and-hold philosophy of long-term investing means I could benefit from future price recovery.

FTSE 100 stocks have done well lately, but as ever, there are exceptions. I’ve picked up three companies that have all fallen around 33% in the last year. Their shares are significantly cheaper as a result, but does that make them bargains?

Can Spirax shares pick up steam?

The first is Spirax Group (LSE: SPX), a specialist in steam management systems and peristaltic pumps. Sadly, its shares ran out of steam several years ago.

To my surprise, they still look relatively expensive trading at a price-to-earnings (P/E) ratio of nearly 24. That’s well above the FTSE 100 average of around 15. This either suggests investors still have high expectations for future performance, or that Spirax needs to unwind further to qualify as a true bargain buy. I suspect the latter.

It did enjoy a barnstorming start to 2025, with its shares surging 20% in January. This was powered by hopes that a Chinese economic recovery could boost demand for its industrial steam systems. But the rally didn’t last. The share price is sliding again. Broker Shore Capital recently flagged structural threats, including the impact of generative AI and lengthening replacement cycles.

Uncertainty in the global economy isn’t helping either. Despite increasing its dividend for 55 consecutive years, Spirax yields just 2.22%. Hardly compelling. Right now, I wouldn’t consider buying.

Should I buy Rentokil shares?

Pest control specialist Rentokil Initial (LSE: RTO) grabbed my attention during last year’s short-lived French bedbug panic, as I wondered if it might benefit. I’m glad I didn’t scratch the itch to buy it though, because its shares continue to stink out the FTSE 100.

They’re down 16% in the past month alone, after a poor set of results published on Thursday (6 March). They included an 8.1% drop in full-year adjusted pre-tax profit to £703m. Revenue rose just 1.1% to £5.4bn.

North American operations were supposed to be a big growth driver but have underperformed in practice. With the US economy still bumpy, a turnaround may take time.

Rentokil is cheaper than Spirax, with a P/E of 16, but after last year’s narrow squeak I won’t let this infest my portfolio now either. The dividend yield is a modest 2.66%.

Croda shares are suffering from long Covid

Speciality chemicals company Croda International (LSE: CRDA) is the third of my 33% fallers. Full-year results, published on 25 February, disappointed, with adjusted pre-tax profit down 11.6% to £273m. Operating margins slipped from 18.9% to 17.2%, prompting the board to launch a £25m cost-cutting plan.

Croda’s shares spiked above 10,000p during the pandemic, as panicked customers stockpiled chemicals, pulling forward demand. But today, they stand at 3,242p, with customer demand still “subdued”. Despite the slump, Croda still isn’t in deep-value territory, trading at a P/E of 23.

This is another dividend stalwart, having hiked payouts for 27 consecutive years. Today, it yields 3.4%. It still doesn’t tempt me.

All three may well recover when the wider economy picks up, but they don’t look primed for a rapid rebound today. I can see better value elsewhere on the FTSE 100 right now.

As an investor, there are few things more satisfying than identifying a top value stock, then watching it recover.

Everybody likes bagging a bargain. Whether it’s in the shops or the stock market. Everybody likes to be proved right too, especially when they’ve made a tough call. Even better if the dividend is higher than it would have been. And the growth rolls in too.

It isn’t easy though. If it was, everybody would be doing it. I’m always on the hunt, and this morning I called in ChatGPT to help with my search.

AI rates Taylor Wimpey shares today

I never take ChatGPT’s results too seriously and it has serious limitations. Usually, it’s just lifting answers from articles written by human beings who’ve done the hard yards and not being very imaginative either.

Still, I won’t quibble because the two FTSE 100 value shares that ChatGPT tipped are both in my portfolio. It said they “have faced challenges but exhibit potential to rebound in the next 12 months”.

The first was housebuilder Taylor Wimpey (LSE: TW). My robot buddy praised the UK housing market’s resilience, with prices rising despite economic uncertainty. Despite that, the Taylor Wimpey share price is down 18% over 12 months, “reflecting investor concerns over persistent inflation and its impact on interest rates”.

But with Rightmove forecasting 2.5% house price growth this year, and City analysts anticipate a 23% earnings jump in 2025, it could be heading for a “significant rebound” in the coming year.

I agree with all of that. That’s why I hold it. Along with its irrresistible 8.3% yield. In one respect, I’m in no hurry for the stock to recover, because my reinvested dividends will pick up more Taylor Wimpey stock at today’s lower price.

I wasn’t surprised to see my chatbot chum flag up Diageo (LSE: DGE), the global beverage giant known for brands like Johnnie Walker, Bailey’s and Guinness. This is a stock in urgent need of a pick-me-up.

I’ve been confident that Taylor Wimpey will fight back at some point, but harbour doubts about Diageo. So I’m pleased to see ChatGPT bigging it up.

The Diageo share price is a downer

The Diageo share price is down almost 25% over the last 12 months (and 40% over two years) as the global slowdown hit sales, notably in Latin America where it’s also faced inventory issues.

Diageo made a big push into the premium drinks market, only to find to consumers tightening their belts amid economic pressures.

ChatGPT reckons consumer spending will pick up once global interest rates finally decline, “providing a favourable environment for Diageo’s growth and recovery in 2025”. 

It also notes that Diageo is shifting growth to its attention to faster growing parts of the market, including non-alcoholic beverages. But it doesn’t mention one big factor that worries me. Younger people are drinking less. I still can’t work out whether this is a fad, or they’re serious about sober living. The answer may determine Diageo’s fate.

Yet the shares are low relative to former highs, trading at 16.5 time earnings, while yielding more than I can remember at 3.7%. So I’ll hang on, plough back my dividends, and hope ChatGPT is right on both counts.