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Lloyds Banking Group (LSE: LLOY) is one of the UK’s most widely held shares. That’s partly because 65,000 people work for the group, many of whom own company shares. What’s more, Lloyds is very popular with UK retail investors, with hundreds of thousands appearing on its shareholder register. Thus, the Lloyds share price is keenly watched, so here’s what happened to it in 2021.

The Lloyds share price in 2021: highs and lows

As I write on Thursday afternoon, the Lloyds share price stands at 48.43p, up 0.43p (+0.9%) on Wednesday’s close. On 31 December 2020, the stock closed at 36.44p, so it has added almost 12p this calendar year. That’s a healthy increase of almost a third (+32.9%) in 2021. This easily beats the FTSE 100 index’s gain of 15% since 31 December 2020.

However, the Lloyds share price has been somewhat higher — and much lower — this year. Last month, it hit an intra-day 52-week high of 51.58p on 2 November. It has since fallen back by 3.15p (-6.1%). Then again, Lloyds stock had a weak start to the year, hitting its 2021 intra-day low of 32.25p on 28 January. It has since soared by 19.33p from this bottom, surging by 60%. Happily, this vindicated my repeated arguments that it was a great recovery play for 2021.

Is Lloyds still a value play?

At the current Lloyds share price of 48.43p, the Black Horse banking giant is valued at £34.4bn. To me, this seems a modest price tag for a leading UK lender with 30m customers and market-leading positions and brands. But UK banking has been a difficult and troubled business since the global financial crisis of 2007-09. As a result, British bank shares trade on modest ratings today.

At present, Lloyds shares trade on a price-to-earnings ratio below 7.4 and an earnings yield of 13.6%. Those figures definitely appeal to me as a veteran value investor. But the UK regulator ordered banks to suspend their cash dividends in 2020 — and when they returned, they were rebased at lower levels. Hence, the Lloyds dividend yield (previously one of the FTSE 100’s highest) is just under 2.6% a year. That’s some way below the wider FTSE 100’s yield of roughly 4%. Still, these figures suggest to me that Lloyds shares remain firmly in value, unloved or overlooked territory.

Positive and negatives for Lloyds

When I look ahead to 2022-23, I see two negatives and two positives for Lloyds and its share price. First, the bank’s profits were greatly boosted this year by loss write-backs, as actual loan losses proved to be considerably lower than forecast. These gains are unlikely to persist next year, taking a chunk out of bottom-line growth. Second, Covid-19 is yet to be beaten, so further new variants might hit UK economic growth and Lloyds’ earnings next year.

Now for the positives. First, the Bank of England this month raised its base rate from 0.1% a year to 0.25%. This, the first rate rise for three years, will be followed by others in 2022 as the Bank seeks to curb rising inflation. Higher rates should lead to higher net interest margins (NIMs) for UK banks. Second, if Lloyds uses its billions of pounds of spare capital to keep lifting its dividend, then this could support the stock going yet higher.

In summary, I don’t own Lloyds shares, but I would buy today, while hoping for a sustained economic boom in 2022!

Cliffdarcy 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.

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Last year at this time, it appeared that the pandemic would soon be over. Beaten down stocks had started to inch up in late 2020. And many of them did indeed continue to recover through 2021. But not all of them saw the same boost. Some sectors continued to be mired in uncertainty, as a result some stocks’ prices remained weak. 

Perhaps the best example of this is the travel segment, that includes a FTSE 100 stock like International Consolidated Airlines Group and FTSE 250 stocks like easyJet and National Express among plenty of others. I am talking about these right now, because they are part of my investment portfolio. And I cannot ignore the fact that all three of them have underperformed compared to my other investments this year. 

Why I am not worried

I am not particularly perturbed about this. 2021 has continued to be a hard year for these stocks after a disastrous 2020. Restrictions on travel have significantly reduced their capacity to generate revenues (especially the air carriers). Even for a coach operator like National Express, which have seen some degree of financial turnaround, uncertainty is still a big drag on the share price. Its recent merger deal with Stagecoach, could hurt its share price, because there is an element of uncertainty about a combined future. 

Another reason why I am holding on to these stock for now is, that I do expect recovery over time in their operations. I bought them for the long haul, so if in one year they fall by, say, 20% or rise by that much, it makes no difference to me in actual terms. As long as they are able to pick up as the pandemic moderates further, I am content. The real challenge, in my view, would be if their performances continued to falter even after the pandemic was over. 

What could go wrong

I cannot say that will happen, of course. Right now I cannot even say when the pandemic will be over. At the same time, I think 2022 could be a far better year for these stocks than 2021. Slowly but surely, travel is opening up again. IAG, for instance, is restarting short-haul flights from March onwards. While it will start these operations with three aircrafts, by May these are expected to rise to 18.  

Would I invest in these stocks now?

If I had not already bought these three stocks, I would seriously consider buying them now. A lot of other recovery stocks look quite expensive to me today. And these are among the remaining ones that stand to gain as sentiment picks up. However, I am not adding to my positions in these stocks, because I do not want to be overexposed to what I see as high-risk investments. 

Manika Premsingh owns National Express Group, easyJet and IAG. 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 index has made some solid gains in the past year as investors became bullish about the prospects of financial markets and the economy. Many of the index’s constituents have managed to chalk up double-digit increases in share prices. But among these, three stocks stand out for me in particular, which would make good additions to my investment portfolio in 2022.

#1. Ashtead: the biggest FTSE 100 gainer

The first of these is industrial equipment rental company Ashtead. It has seen a 70%+ increase in its share price this year as I write. It is possible that next year’s gains might not be quite as high as this, considering that its price-to-earnings (P/E) ratio at around 35 times is much higher than that for the average FTSE 100 stock. 

But there is a whole lot for me to like about the stock. The first is its prospects, which look pretty sound considering that the US market, which is its biggest, could grow because of President Biden’s Build Back Better bill. Also, its long-term share price chart is encouraging, which to me shows a company that navigates itself out of economic downturns with relative ease. It is on my investing wishlist for 2022.

#2. Croda International: steady growth

Next, I like speciality chemicals manufacturer Croda International, which has risen by some 50% this year. Like Ashtead, it also has a confidence-building share price trajectory. And one look at some of its latest results indicates why. The company has performed well, growing both its profits and revenues. It is also optimistic in its outlook, which encourages me to consider buying the stock even though it is quite pricey. 

Right now, it has P/E of 55 times, which makes it among the more expensive stocks. But considering that it upgraded its profit expectations for the second half of this year in its last update, I think there is some justification for its high P/E. Ideally I would buy it on a dip, but even without a dip, I think this is a good stock for me to buy for the long term. 

#3. Royal Mail: e-commerce bonanza

Another long-term buy for me would be Royal Mail if I had not bought it already. The stock has seen an over 40% increase and it is not hard to see why. The letters and parcels delivery service provider has gained from the e-commerce boom, with its parcels revenues surpassing those from letters for the first time in the last financial year. With online shopping expected to carry on going strong, this segment should continue to rake in bigger revenues in the future as well. The rate of growth could slow down as the pandemic eases further, but I reckon that the stock is likely to continue rising. With a P/E of sub-6 times, it is a great stock to buy in my view, especially considering that it also pays dividends. This is why I bought it. 

Manika Premsingh owns Royal Mail. The Motley Fool UK has recommended Croda International. 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 think these three penny stocks could deliver exceptional returns over the next decade. Here is why I would buy them for my shares portfolio right now.

A penny stock for the pandemic

Soaring Covid-19 cases means investing in medical testing companies could be a very good idea. EKF Diagnostics (LSE: EKF) is a share that has been on my radar long before the Omicron variant sent infection rates spiralling again. Medical experts think that coronavirus could be around forever, even when the current pandemic has passed. Therefore, the market for virus-detection kits could remain highly lucrative.

EKF Diagnostics not only manufactures antibody tests. It also makes kits that allow samples to be safely collected, transported and handled. All of these products will remain in high demand for some years yet as governments prioritise individual testing over mass lockdowns so as not to disrupt the economic recovery.

I’d buy EKF to capitalise on this theme, even though competition in the testing space is intensifying.

Riding the copper train

I think getting exposure to some classic commodities stocks is an attractive prospect too. Inflation is widely tipped to get worse in 2022, as energy prices increase and rising Covid-19 cases exacerbate supply chain problems. Raw materials like copper tend to rise in value when prices are accelerating, history shows us.

Phoenix Copper (LSE: PHX) is a penny stock I’m considering buying to protect myself from the inflationary threat. To recap, Phoenix is developing the Empire red metal mine in Idaho with a view to recording first production towards the end of 2022.

I wouldn’t just buy the mining stock for near-term security though. I think demand for its highly-conductive metal could soar as electric vehicle (EV) sales take off. Sales of these low-carbon vehicles in China — the world’s largest market for low-emission vehicles — rocketed 18% month-on-month in November, according to Bloomberg. But mining delays or slowing EV sales could still dent the stock’s prospects.

Another top housing stock

I’m capitalising on soaring home prices with my Barratt Developments and Taylor Wimpey shares. But the rocketing cost of buying residential property isn’t a UK-only problem, of course. I’m thinking of buying Glenveagh Properties (LSE: GLV) shares to play the favourable Irish housing market and give my portfolio a little added geographic diversification in the process.

House prices in Ireland are going from strength to strength. Latest data from the country’s Central Statistics Office showed average property prices rose 13.5% in October. This was the highest year-on-year increase since the summer of 2015.

Encouragingly for Glenveagh investors, the company is increasing production to make the most of this opportunity. The penny stock has plans to put up 3,000 new homes each year by 2024. My main concern for construction stocks like this is building materials are becoming scarce. This could make it more expensive for the business to build and could even derail the firm’s productions.

That said, the rate at which house prices are rising still makes Glenveagh a top buy, in my book.

Royston Wild owns Barratt Developments and Taylor Wimpey. 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.

With less than a day of trading left in London for 2021, I’ll reveal seven crucial factors that affected my investing in in 2021 and could still make an impact next year. 

Global growth rebounded

When Covid-19 rocked markets in early 2020, economists rapidly downgraded estimates for economic growth. But the global economy rebounded strongly this year, driven by successful vaccination programmes. Thus, global growth is forecast to have been 5.6% for 2021, following a 3.4% fall  in 2020. I calculate this is the strongest rebound since 1973 — and strong growth often lifts investing returns.

Investing in the US: S&P 500 surges

It’s been a great year for investing in US stocks. As I write, the S&P 500 index stands at 4,793.06 points, close to Tuesday’s record high of 4,807.02. Over one year, the index has soared by 28.4%, following leaps of 16.3% in 2020 and 28.9% in 2019 (all excluding dividends). But given the S&P 500 has more than doubled over five years (+114.1%), I wonder if this bull market can keep going much longer?

Investing in the UK: FTSE 100 lags behind

One disappointment from the ‘everything rally’ in 2021 is the FTSE 100 index. As I write, the Footsie stands at 7,422.79 points, close to Monday’s 2021 peak of 7,457.14. Over one year and excluding dividends, the index has gained 13.2%. However, it has risen a mere 3.9% over the past five years, making it a poor relation of its American cousin once again.

Bonds bombed

In the past, bonds provided portfolios with ‘risk-free returns’. These days, I see them as offering ‘return-free risks’. Hence, my family portfolio has held no bonds for several years. This year, the global bond market has fallen by around 5% — its worst performance since 1999. With inflation returning, I’d be reluctant to start investing in bonds in 2022.

Crypto investing: Bitcoin boomed

Almost anyone under 30 who discusses investing with me has one thought: Bitcoin. The price of ‘digital gold’ has been highly volatile in 2021, ranging between $29,000 and $68,000. Currently, it stands at $47,476, up 64.3% over one year. That’s another big win for crypto fans, but one that might not last (or maybe it will, nobody knows). Meanwhile, the price of real, old-fashioned gold fell by 5.2% over one year. So much for gold’s alleged role as a hedge against inflation.

Inflation returned with a vengeance

Since the turn of the century, developed-world inflation has been very subdued. But in 2021, it staged a major comeback. In November, US Consumer Price Index (CPI) inflation soared to 6.8% a year, its highest level since June 1982. Over the same period, UK inflation hit 5.1%, a 10-year high. What’s more, economists don’t expect inflation to peak until perhaps mid-2022, further eroding family incomes and investing returns. Yikes.

Interest rates rose

As inflation took off this year, bond yields rose in the US, UK and eurozone. In late 2021, the Federal Reserve began to wind down its bond purchases from $120bn a month to zero by March 2022. The US central bank also plans to raise its key interest rate by up to three times in 2022. Meanwhile, the Bank of England raised its base rate in December, the first increase for three years. It remains to be seen how well investing returns fare in 2022 as rates creep up.

Finally, 2020-21 has produced exceptional investing returns for my family portfolio. Yet I remain cautious about the risks of another stock market crash. That’s why I’ll stick to buying lowly rated, high-yielding and cheap UK stocks in 2022-23!

The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of investment advice. Bitcoin and other cryptocurrencies are highly speculative and volatile assets, which carry several risks, including the total loss of any monies invested. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

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.

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Whenever I have covered the Rolls-Royce (LSE: RR) share price, I have always tried to highlight the company’s potential.

I think its long-term potential is highly exciting, although I am also aware that getting past short-term headwinds will be a challenge. The pandemic has devastated the group’s business model. It has cut thousands of jobs and taken on a lot of debt to try and survive. 

The good news is, the company now seems to be past the worst. And I think this recovery could send the stock back to 300p. In this scenario, the Rolls-Royce share price could turn an investment of £1k into £2.5k. That would be a 150% return on my money. 

Improving outlook 

After two years of disruption, it now looks as if Rolls-Royce is back on track. Over the past couple of months, several positive updates have helped improve sentiment towards the business. These updates include the sales of business divisions to raise cash, the recovering aviation market, and the funding of Rolls’ new nuclear power plant business. 

This last point is something I am highly excited about. Rolls’ expansion into the nuclear power business should help it diversify away from the aviation sector. The latter can be highly cyclical, as we have seen over the past year. Therefore, by expanding into power generation, the group should stabilise its income streams. That may also attract a different class of investors. 

Still, it will be at least a decade before this division is up, running, and generating sales. In the meantime, the company will continue to depend on aviation sales. 

On this front, there is more good news. Airlines have started to order new plans in the past six months. This shows most are still committed to expansion plans after the disruption of the pandemic. This is fantastic news for Rolls, which depends on the income from the service contracts it sells with its new engines. 

Rolls-Royce share price headwinds

Despite all of the above, the company will have to navigate many challenges before the stock can return to 300p. These include competition and the general disruption caused by the pandemic. Although the aviation sector is starting to recover, some analysts believe it could be the middle of the decade before the industry has completely moved on. 

Nevertheless, as the business starts to rebuild and looks to diversify, I think the chances are improving and the stock can return to its pre-pandemic high of 300p, or more. 

That is the main reason why I would buy the shares for my portfolio today and could turn an investment of £1k into £2.5k, or more.

The firm has plenty of challenges to overcome in the years ahead, but I think the Rolls-Royce share price has huge recovery potential in 2022 and beyond. 

Rupert Hargreaves 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.

Tesla (NASDAQ: TSLA) shares have been a great investment in recent years. As I write this in late December, the stock is up about 60% over 12 months. Meanwhile, over a five-year horizon, the TSLA share price is up more than 2,000%.

Should I buy Tesla stock for 2022? Let’s take a look at the investment case.

Is Tesla a good stock for 2022?

There are a number of things to like about Tesla heading into 2022, in my view. For starters, the company is still very much the undisputed leader in the electric vehicle (EV) market.

This market is likely to see strong growth, not only in 2022, but for years to come. Indeed, according to Fortune Business Insights, the global EV market is set to grow from around $290bn in 2021 to $1,320bn by 2028. This means Tesla has significant growth potential from here on.

Secondly, Tesla plans to open new ‘gigafactories’ in Berlin, Germany, and Texas, USA, in 2022. These should boost production numbers significantly. It’s worth noting that Tesla believes its German plant will be able to churn out EVs around three times faster than its domestic automakers can.

Third, Tesla plans to start producing its ‘Cybertruck’ in late 2022. This is set to be manufactured at its new Austin, Texas, plant. I’m not expecting meaningful sales of the Cybertruck in 2022. However, it could create some excitement around the stock.

Finally, it’s worth noting that CEO Elon Musk recently said that he’s “almost done” selling TSLA stock. Musk has been selling stock lately (more than $15bn worth) for tax reasons. This has put downward pressure on the share price.

Risks to Tesla’s share price in 2022

Having said all that, there are plenty of risks that could impact the share price next year. One major hurdle is competition from rivals. This is really heating up. In 2022, I expect Tesla to face plenty of rivalry from the likes of Ford, Volkswagen, Mercedes, Rivian, and Lucid (Lucid’s ‘Air’ has been dubbed a ‘Tesla killer’). All of these companies have recently launched slick new EVs. This could be an issue for Tesla, as some of its vehicles are now beginning to look a little dated.

Another risk is chip shortages. To date, Tesla has handled the global semiconductor shortage reasonably well. It hasn’t been impacted in the way that companies like Ford and GM have. However, the global shortage of chips does remain a risk.

Of course, there’s also the valuation. At present, analysts expect Tesla to generate earnings per share of $8.26 in 2022. At the current share price, that equates to a forward-looking P/E ratio of about 130. That seems very high to me. To my mind, a lot of the future growth here is already priced into the stock. If growth is disappointing, the stock could experience some serious volatility.

Tesla stock: my move now

Weighing everything up, I don’t see Tesla as a buy as we head towards 2022. All things considered, I think there are better growth stocks I could buy for my portfolio for next year.

Edward Sheldon 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.