The Motley Fool
Published Oct 16, 2020 07:08
3 reasons I’d ignore the Lloyds share price and buy other cheap UK shares for my ISA
Is it finally time to pay serious attention to the Lloyds (LSE:LLOY) share price?
The FTSE 100 bank has bounced off the multi-year lows it hit last month, leading to hope that the worst could be over for the embattled bank. Yet it could be argued that Lloyds is a UK share that still looks extraordinarily cheap. City analysts predict that the bank’s annual earnings will rebound more than 230% in 2021. This leaves it trading on a bargain-basement price-to-earnings (P/E) ratio of 8 times for next year.
But this is not all, as brokers expect the Prudential (LON:PRU) Regulation Authority to lift its dividend embargo sometime over the next 12 months. And this means Lloyds sports a monster 5.5% dividend yield for next year.
3 big risks I won’t dispute that Lloyds’s earnings multiple makes it extremely cheap on paper. But we trade shares in the real world and not in two dimensions. I still believe the FTSE 100 firm carries too much risk today. And the cheap Lloyds share price reflects its status as a high-risk investment.
There are several major reasons why I reckon the Lloyds share price could sink again, including:
The post 3 reasons I’d ignore the Lloyds share price and buy other cheap UK shares for my ISA appeared first on The Motley Fool UK.
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Motley Fool UK 2020
First published on The Motley Fool
Written By: The Motley Fool
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