The Lloyds share price has been gaining serious momentum this year. It fell 1.2% in June, yet year to date it’s up 16.3%. If I’d invested in Lloyds instead of the FTSE 100, I’d be a happy investor. In 2024, the Footsie has climbed ‘just’ 5.4%.
But what could July have in store for the stock? Lloyds currently trades for 54.7p a share. Could we see it break the 60p barrier this month?
A volatile month ahead
To reach that milestone, that would mean its share price would have to rise a further 9.7%. That’s not impossible. But it’s incredibly unlikely.
That’s because we’re set for a potentially volatile month. We have the election coming up in the next few days (4 July). All major political polls have the Labour party as the front-runner to win. Nonetheless, a shock result could see the markets throw a tantrum.
That said, one positive is that both the Labour party and the Conservatives have laid out policies that look set to benefit banks, which could provide Lloyds with a boost.
However, there are other factors. For one, while inflation has fallen to the government’s 2% target, it remains a threat. What’s more, there’s also the Bank of England’s actions around interest rate cuts to consider. It seems the market is pricing in the first cut to come in August. That said, any signs of a delay would dent investor confidence and market sentiment.
Cheap as chips
But here at The Motley Fool, we don’t buy shares with only the short term in mind. I like to look past that. After all, the market has proved time and time again the best way to reap its rewards is to invest for the long term. By that, I mean at least five years. Ideally, it would be much longer.
So, do I see long-term value in Lloyds at its current price? Yes.
Its shares look cheap. They trade on just 7.5 times earnings. That’s way below the Footsie average of 11. Its price-to-book ratio is just 0.7, where 1 is considered fair value.
Its cheap share price also means a higher dividend yield. Today, the stock yields 5%. Again, that’s above the average of its Footsie peers (3.6%).
UK focus
There are a few other risks I see with Lloyds aside from short-term volatility. For example, it generates all of its revenues from the UK. I own shares in Footsie competitor HSBC given its diversification and investment in regions like Asia. Lloyds doesn’t offer this.
One for the future
But even so, I’m bullish on the UK bank. Lloyds may not reach 60p this month, but I’ll be holding on to the shares I own. I’m confident in the years to come we could see it surpass the 60p mark.
Analysts have a 12-month price target for the stock of 59.4p. With it looking like great value for money, I think now could be a smart time to consider buying some shares in the Footsie banking stalwart.
This post was originally published on Motley Fool
