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Lloyds (LSE: LLOY) shares have delivered some solid returns for investors this year. Having seen 33% year-to-date returns, the shares are currently trading at 46p. However, this is still over 25% lower than its pre-pandemic share price. With exciting growth plans in place for the next few years, I think Lloyds stock could see some great growth throughout 2022.

Expansive plans

In August, Charlie Nunn took over leadership of the firm and he’s since announced major growth plans. The new strategy looks to enhance the firm’s stake in property, wealth, and commercial and investment banking. This comes after encouraging third-quarter revenues that beat forecasts by over 50% and have led to the firm sitting on over £4bn in capital.

Nunn has suggested that a portion of this capital might be spent on expanding the budget for Citra Living, Lloyds’ private landlord company. Quadrupling the budget from £250m to £1bn will vastly speed up the process of Lloyds becoming the UK’s largest private landlord. This could be a great move for the firm moving forward.

Lloyds is already the UK’s largest mortgage lender and second-largest credit card provider. Therefore, I think expanding different parts of the business seems smart if the firm wants to expand its domestic market share. In addition to this, plans to expand overseas business have also been considered, with the firm exploring the possibility of opening a New York branch. Such a presence could allow the firm to compete against larger, more international firms such as HSBC.

In addition to this, as my fellow Fool Charlie Keough pointed out, the next Monetary Policy Committee meeting is being held on 16 December. To combat inflation — which has been steadily climbing over the past few months — a hike in interest rates is expected by many investors. If this is the case, Lloyds will be able to charge more on its mortgage loans. This will help build upon the firm’s already strong revenues.

Risks for Lloyds shares

One risk that could continue to plague Lloyds shares’ growth is the Omicron variant. The shares fell by over 7% on 25 November when news broke of the variant. This is because of the threat it poses to the UK economy. If more lockdowns occur, they could seriously hamper the growth of the shares.

In addition to this, although Lloyds is beginning to speed up growth in international business areas, it is still substantially behind some of its competition. Such a heavy domestic focus led the firm to be very closely tied to the UK economy. If the UK economy underperforms, so might Lloyds shares.

And of course, its growth plans come with risk too. Entering the rental sector and possibly opening a New York branch aren’t guaranteed to succeed.

The Verdict

Although Lloyds shares are subject to Omicron threats, for me, the positives outweigh the risks. New leadership and expansive plans seem very encouraging. If these plans come to fruition in 2022, I expect Lloyds shares to climb higher. As such, I would consider adding them to my portfolio going into 2022.

Dylan Hood has no position in any shares mentioned. The Motley Fool UK has recommended HSBC Holdings and 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.

In the early months of 2021, Argo Blockchain (LSE: ARB) proved itself as one of the hottest stocks on the market. Climbing over 400% in the first three months of 2021, the crypto mining company’s shares have delivered a whopping 132% year-to-date return for investors.

However, the Argo Blockchain share price has been sliding in recent months, falling 22% in the past 30 days. There are positives and negatives to consider before adding this stock to my portfolio. I’m going to take a closer look at both cases before considering buying this dip.

Positive growth

An undeniable positive for the firm has been its continued strong growth rates over the past year. For example, in November, Bitcoin mining capacity rose 15%, with revenues reaching £8.3m. Back in March, the firm announced the acquisition of a 320-acre plot of land in Texas on which it will be constructing a 200-megawatt mining facility over the next year. This facility is expected to deliver a tenfold increase compared to current mining power.

The firm operates with extremely high profit margins of 66% (as of September 2021), which have also risen substantially throughout the past year. Announcing record Q3 results in early November, the firm achieved £19.3m in revenues. Due to the high margins, £12.9m of this was profit. This is very encouraging to potential investors like myself who are considering purchasing the share price dip.

Crypto price volatility

One risk for the Argo Blockchain share price is the fact that revenues are so linked to the cryptocurrency market. As we all know, the crypto market has seen exponential growth in recent years, however, it’s also extensively volatile. We often see double-digit swings in the price of Bitcoin, Argo’s most heavily mined coin.

The wider crypto market also seems to be hitting some turbulence at the moment, with Bitcoin’s share price falling 21% in the last 30 days. Even if Argo’s impressive growth continues, if the price of Bitcoin falls enough, the firm’s revenues will fall. For example, say Bitcoin’s price halves in the next month – a phenomenon we saw earlier this year – Argo would have to mine double its previous month’s capacity to make the same revenues. This business plan seems very risky to me.

In addition to this, short-seller Boatman Capital has recently attacked Argo for massively overpaying for its Texas land plot. Argo paid $17.5m, but Boatman is arguing a more appropriate valuation of the land would have been $168,00. It has also released a report questioning the firm’s corporate governance. If such allegations are true, they could turn investors against Argo Blockchain shares.

The Verdict

All things considered, I won’t be buying the Argo Blockchain share price dip right now. Although the firm has demonstrated great growth levels over the past year, the fact that it’s so closely tied to the crypto market has been a red flag for me since day one. In addition to this, the recent allegations worry me and if they prove correct, I think we could see the Argo Blockchain share price slide further.

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.

Dylan Hood 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.

I’m looking at top FTSE 100 stocks I can buy and hold through next year. Here are two I think will offer great returns for my portfolio.

A top FTSE 100 dividend stock

The first company I’m going to buy and hold is Legal & General (LSE: LGEN). It’s a financial services business, offering a wide array of investment and insurance solutions.

The share price has performed well over one year and is up almost 20% at time of writing. This means the stock has outperformed the FTSE 100, which has risen 11% over the same time period. I think this could continue in 2022.

First, the dividend yield forecast for next year is a huge 6.3%. I have to keep in mind that dividends are never guaranteed. However, Legal & General was able to keep paying a dividend throughout the pandemic, so there’s a good chance that it’ll be paid in 2022.

Then, Legal & General is expanding its alternative asset management businesses. Its aim is to generate £500m to £600m in operating profit from alternative assets management by 2025. Operating profit for this division doubled to £250m in the recent half-year results. I consider this an exciting area within its asset management business.

There’s always a risk of a stock market crash next year which would lower the fees that Legal & General earns on its assets under management. Nevertheless, I view the stock as a great buy and hold for my portfolio in 2022.

A stock that’s underperformed

The next company I’m going to buy and hold in 2022 is London Stock Exchange (LSE: LSEG). It’s the largest stock exchange in the UK today. Because of this, it has a wide economic moat that protects its business from potential competitors.

The share price has had a torrid time in 2021. In fact, over one year the stock has plummeted over 20% as I write. This is largely due to the acquisition of Refinitiv, the financial data and analytics platform. London Stock Exchange guided for a significant increase in costs as it integrates Refinitiv into its current business. This increase in costs will reduce future profitability, so the stock has re-priced lower to reflect this.

However, I view this as a short-term issue. There’s great potential here for London Stock Exchange to offer leading financial data and analytics services once Refinitiv is integrated. I think this could widen the economic moat of the company.

There are still risks at play here. For one, the integration of Refinitiv into London Stock Exchange’s business might not work out as acquisitions are never guaranteed to be successful. With this in mind, the costs associated with Refinitiv may be higher than I anticipate. This would no doubt cause the share price to underperform again.

Taking everything into account, I’m still going to buy and hold the stock in my portfolio in 2022.

Dan Appleby owns shares of Legal & General and London Stock Exchange Group. 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 outlook for the global economy in 2022 is rife with potential problems. The Covid-19 crisis continues to drag on. Runaway inflation is expected to worsen, and China’s economy is cooling rapidly. I wouldn’t like to predict where the FTSE 100 will be this time next year.

This doesn’t mean I’ll stop looking to add to my shares portfolio though. There are plenty of UK shares that could thrive in 2022, even if broader economic conditions remain tough. So should I buy these two FTSE 100 shares for my portfolio?

A high-risk FTSE 100 share

At first glance, International Consolidated Airlines Group (LSE: IAG) shares don’t look that cheap, at current prices. At 137p, the British Airways owner trades on a price-to-earnings (P/E) ratio of 27 times for 2022.

Could IAG’s share price be worth such a meaty premium though? There’s a lot I like about the Footsie flyer, like the immense customer loyalty its brands command and its robust position in the transatlantic market. I also like its significant exposure to the fast-growing budget segment, through its Aer Lingus and Vueling divisions.

That being said, I won’t be touching IAG shares with a bargepole right now! The company isn’t as financially robust as other UK airline shares like Ryanair and Wizz Air, putting it in greater jeopardy as the Covid-19 crisis worsens. In fact, I find its net debt pile (which sat at €12bn as of mid-2021) frankly terrifying.

My fears for IAG ratcheted up this week when travel rival TUI said that booking levels are cooling following the emergence of the Omicron variant. Things threaten to remain difficult too if countries continue to ramp up travel restrictions to limit infection rates.

Surfing silver

I think Fresnillo (LSE: FRES) could be a much wiser FTSE 100 stock for me to buy. I think the silver and gold it produces could steadily gain in value as fears over Omicron remain, boosting profits at the Mexican miner. Recent US data showing inflation there hitting 40-year highs has also boosted my appetite for this stock. Precious metals tend to rise in value when inflationary pressures increase.

Fresnillo also looks more attractive than IAG’s share price, at current levels of 858p. It trades on a P/E ratio of 13.9 times for 2022, while its price-to-earnings growth (PEG) ratio of 0.9 sits below the watermark of 1 that suggests a stock could be undervalued.

Mining shares like Fresnillo come with their fair share of risk, of course. Exploration work can fail to reveal what the company believes could be the next mammoth mining project. Development and production costs can also spiral out of control and issues that bring output to a halt are commonplace. This can hit revenues hard.

Still, I think it could be argued that at current prices these risks are baked into Fresnillo’s share price. And from a long-term perspective, I’m encouraged by its efforts to build a raft of low-cost mines inside and outside of Mexico. I think they might deliver handsome profits in the years ahead.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Fresnillo. 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.

Electric vehicle (EV) shares took the market by storm in November. Tesla shares broke above $1,000 and others also saw a lot of interest. Both Rivian (NASDAQ:RIVN) and Lucid Motors (NASDAQ:LCID) saw strong short-term gains. However, since the middle of November these top EV stocks are off their highs. Rivian is down 34% from the peak, with Lucid down 33%. Is this the dip for me to buy?

Caught up in risk sentiment

The top EV stocks have moved lower for a different reasons. First, the Lucid Motors share price tanked recently due to news regarding an SEC investigation. In a regulatory filing, the company said that there was a request of “production of certain documents related to an investigation”. This appears to be regarding the nature of how the company went public via a SPAC (special purpose acquisition vehicle). However, this hasn’t been confirmed, so we’ll just have to wait and see.

Rivian stock doesn’t seem to have been hit due to company specific news. In fact, most of the market is still looking ahead to upcoming results in order to gauge the future direction of the company. However, the share price appears to have suffered from broader risk sentiment.

In recent weeks, the discovery and rise of the Omicron variant has spooked some investors. During periods of uncertainty, people tend to sell high-risk growth stocks. The money then usually goes towards defensive stocks as a safer place to weather a potential storm. I would definitely classify Rivian as a high-risk stock. Since the IPO only a month ago, the stock had been volatile as investors try to place an accurate value on the business.

Risks and rewards of top EV stocks

One reason why I might decide to buy the potential dip is if I believe in the long-term future of EVs. With global government initiatives around the environment and higher consumer awareness around electric vehicles, I think demand will continue to grow. These top EV stocks are likely to be leaders in the sector. Clearly, others such as Tesla have a head start. But the potential market is huge and so could easily be shared among a selection of manufacturers. 

Another reason why I could consider buying now is if I’m optimistic on the outlook for 2022. These high-risk stocks will continue to be influenced by sentiment around Covid-19 and the health of the global economy. So if I think that Omicron isn’t something to be seriously concerned about, now could be the time to buy. If we’re in a positive risk environment next year then I’d hope the share prices of these top EV stocks should be higher.

What about potential risks? I think a big one is the fact that both Rivian and Lucid are at an early stage of production. Their business models are somewhat untested when it comes to seeing how they can handle reaching scale. It could take several years to reach a mass level that enables the companies to become profitable.

But I would consider buying these top EV stocks today. However, I’d invest 50% now and then hold off on the other 50% to see how the stocks trade over the next few weeks.

Jon Smith and The Motley Fool UK have 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.

I’ve been looking at penny stocks for my portfolio. Sometimes they can be higher-risk investments that are more volatile than larger companies. But I’d always consider investing in penny stocks — as long as I research the companies concerned — because the return potential can be huge.

Here are two penny stocks I’ve been considering this month.

A penny stock to buy

I’ve been looking at Creightons (LSE: CRL) as a potential buy for my portfolio. It’s a developer and manufacturer of toiletries and fragrances for its own brands and also private labels. It provides outsourced manufacturing for third-parties too.

The share price is 97.5p as I write, so only just in penny stock territory. In fact, as recently as September the share price was around 130p. I view the stock decline as general market weakness, and not about anything specific to the company’s performance.

Even though Creightons is a penny stock today, with a market value of only £68m, the company is showing signs of being a quality operator. For example, it’s able to generate double-digit returns on its capital. It has been able to increase its operating margin almost every year from 2012 when it was as low as 1.6%. In the company’s fiscal year 2021 (the 12 months to 31 March 2021) the operating margin had improved to 8.8%. These are key characteristics I look for before investing in a company.

The growth has also been impressive of late. Revenue grew 29% in Creighton’s most recent year, and profit increased further by 37%. Some of this growth was from sales of hand sanitiser due to the pandemic, so may be considered a one-off. This may mean that revenue growth slows, so it’s a risk to keep in mind.

One further risk to consider is the lack of analysts covering the stock as the company isn’t large enough to warrant professional research. Therefore, I have to be confident in my own forecasts before I invest. 

But on balance, I like the potential here. I’m considering this penny stock for my portfolio.

And one to avoid

I also came across AO World (LSE: AO) as a potential penny stock investment. It’s an electrical products retailer operating across Europe and offering a range of kitchen appliances and home electricals.

Revenue growth has been impressive in recent years, so there might be a good investment case here.

However, the company has only recently become a penny stock as the share price dipped to 95p at the end of November. The price was over 400p at the start of 2021, so something must have gone wrong.

Well, in the most recent half-year results to 30 September, the company said it made an operating loss of £11m. This was down from a profit of £16m in the same period one year ago. The company said it built up its cost base as it expected revenue growth to continue. Multiple issues now mean revenue will be flat or even potentially decline by 5% for the full year.

The company has really suffered due to supply chain constraints and cost inflation recently. I don’t expect these problems to ease for a little while longer. So, as it stands, I won’t be investing in AO World until I see some evidence that these issues are easing. If they do, I’ll revisit the investment case here.

Dan Appleby 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.

Income stocks are those that pay out a dividend to an investor. The FTSE 100 and FTSE 250 are full of different income stocks that I can choose from when considering an investment. So here’s how I’d go about trying to generate an income next year.

Trying to ensure dividends are paid

I’m looking ahead at how I can make £1,000 in 2022 and in my opinion, one of the most important things to look at with income stocks is how reliable the payments will be in the future. Next year is a complete unknown that might cause some companies to halt dividend payments and unlike bond coupon payments, dividends aren’t guaranteed. Year-on-year, dividend payments can rise or fall depending on how well the business is performing.

Therefore, I want to try and identify stocks that give me the best shot at getting paid next year (and beyond). This isn’t an exact science by any means. But I can look at the past few years and see what the track record is. I can also look at how well the business has done in 2021, as the dividends will likely be based on this performance. Finally, I can assess the outlook for 2022 and make a judgment call on how well I think the sector could do.

Diversifying income stocks

I need to think about diversifying the shares that I choose to buy. It’s fine having a list of a dozen names that I think are sustainable, but what if they’re all in the same sector? It wouldn’t be the smartest idea to invest in all of them. 

Even though the stocks within one area might be brilliant choices, putting all my eggs in one basket could end up costing me. For example, I might have picked a host of dividend stocks within the banking sector in 2019. Yet in early 2020, the regulator requested banks to stop paying out dividends to help aid cash flow during the pandemic. So if I only held income stocks from this area, I’d be stuck. Rather, I’d prefer to pick a couple of shares from several different industries.

Considering the numbers

Another important point is look at is my cash situation. If I want to make £1,000 next year from dividends, I’m going to need to invest a larger amount than £1,000. 

The easiest way to think about things is to consider how much I’d need to stump up today. If I presumed an average dividend yield of 5%, then I’d need to invest £20,000. This assumes that I’ve picked sustainable income stocks that will continue to pay out in the future.

Of course, this isn’t an option for me at the moment. Alternatively, I could invest month-by-month. This method wouldn’t generate £1,000 in year one. But if I want to make £1,000 in dividend income next year, a monthly plan would get me there. And if I want to enjoy the income in five or 10 years’ time, investing regularly each month should help me build a generous pot in the long term.

Jon Smith and The Motley Fool UK have 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.

Anyone needing evidence that money can still be made in these undeniably tough market conditions should take a look at the Genedrive (LSE: GDR) share price. In the last month, the small-cap’s valuation has rocketed over 230%.

Let’s take a look at what this under-the-radar firm does and, most importantly, question whether such a performance can be sustained. 

What’s this hot stock all about?

Genedrive is a molecular diagnostics business. In its own words, the company’s platform supports “the diagnosis of infectious diseases and for use in patient stratification (genotyping), pathogen detection and other indications”. These include Hepatitis C, military biological targets and, perhaps most importantly, Covid-19. 

Genedrive has been listed since 2007 and shareholders have enjoyed/endured a rollercoaster ride since. However, anyone buying at the height of panic in March 2020 will have done extremely well. Just before Boris Johnson announced the first UK lockdown, the Genedrive share price languished at just under 9p. On Friday, the very same stock closed at almost 62p. 

Why is the Genedrive share price flying? 

On 29 November, Genedrive revealed that its COV19-ID test had been supplied to “a range of potential commercial partners” for review and evaluation. This news was compounded by last week’s announcement that the company had now received the CE mark as intended. In other words, COV19-ID conforms with European health, safety, and environmental protection standards.

I won’t go into the science too much here, save to say that Genedrive’s test (performed via a nasal swab) can deliver positive results in 7.5 minutes. Negative results arrive within 17 minutes. As CEO David Budd commented, this will “allow immediacy and convenience in molecular testing, rather than waiting many hours or days for results from a central laboratory.”

On top of this, Genedrive’s test “offers several orders of magnitude improvement in sensitivity” compared to the usual antigen lateral flow devices.

Rapid results should mean a reduction in transmission rates and, ultimately, a quicker return to normality. That’s potentially great news for, well, everyone but particularly for any operator in the travel, leisure and hospitality space.

More to come?

It’s clear that the Covid-19 tale has several more chapters to run. That could provide a sustained boost to the Genedrive share price. This is especially if deals with partners are announced over the next few weeks and months. A market-cap of just £57m certainly suggests a lot more room for growth compared to the likes of, say, diagnostic peer Novacyt.

Even so, it’s clear only those blessed with a stoical temperament should apply. While GDR has soared in only a few weeks, it’s still way below the 52-week high of 165p. Those who picked up the stock in February or March will still be nursing heavy paper losses.

Due to a relatively small free float (the number of shares available to trade on the market) of 60%, I think this kind of volatility is set to continue. As evidence of this, the Genedrive share price dropped almost 12% on Friday. 

(Very) cautious buy

Recent news from Genedrive is undoubtedly encouraging and I wouldn’t rule out further gains going forward. As such, I’d consider buying a slice of the company today. That said, I’d be sure to only use money I could afford to lose while also remembering that there are other ways to take advantage of the market’s Covid-19 concerns.

Paul Summers 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.

The FTSE 100 index has a current dividend yield of just over 4%. So, in theory, I could bung some money in a low-cost index tracker fund following the Footsie and collect that income.

But the investment would need to be £150,000 to receive dividend income worth £500 a month. So, I’d use the Warren Buffett method to help me invest and compound my way to a pot worth £150k.

Careful capital allocation

Buffett sees himself as an allocator of capital (money). And his main investment activities take place within his listed company Berkshire Hathaway. He said in the company’s 2020 letter to shareholders he wants Berkshire to “own all or part of a diverse group of businesses with good economic characteristics and good managers.”

But he doesn’t care whether Berkshire controls the businesses by owning them outright or simply holds some of their shares. And that’s great news for me because I can simply buy stocks as well — just like Buffett has.

So my plan for building up an investment pot worth at least £150,000 would involve trying to be a ‘mini-Buffett’. There’s no need to go out and start up another Berkshire Hathaway. All that’s required is to choose stocks carefully, buy them at opportune moments, and then hold for years as value compounds within each enterprise.

In the letter, Buffett sketched out a simple approach to investing. He said he looks for stock opportunities based on three things. The first is a company’s durable competitive advantage. The second is the capabilities and character of its management. And the third is price.

Simple, but not easy

It’s simple, yes. But is it easy? No. It’s important for me to do the work with regard to research and to make sure I’m buying stocks at a good-value entry point. Then, when holding, I need to monitor news flowing from my investee companies and regularly test it against my investment thesis. If it breaks down, it may be necessary to act, such as selling my stock holding.

However, Buffett reckons holding carefully-chosen shares requires “little” effort compared with owning companies outright. And he said: “You are awarded no points in business endeavours for ‘degree of difficulty’.”

Buffett and his long-time business partner, Charlie Munger, view Berkshire’s stock market shares as a collection of businesses. And they hold the stocks with the same tenacity they would apply to whole businesses they might control within Berkshire Hathaway. In other words, there’s no difference in their mindset between stocks and businesses. They are both long-term commitments purchased and owned with the intention of building wealth.

And that business-perspective approach to investing is one of the key parts of the Buffett method I’m using as I preside over my own mini-Buffett business ’empire’ within my own stock account portfolio.

But, of course, even as I try to emulate the great man’s approach, there’s no guarantee of positive investment outcomes — all shares carry risks.

Kevin Godbold 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.