The Lloyds Bank (LSE: LLOY) share price has made gains in the past month. This marks a break from the share’s dismal performance this year. The Lloyds share price has been mired in an unsupportive environment that includes a poor economy, low interest rates, the possibility of negative interest rates, and Brexit uncertainty. The latest price rise is a bit of a relief.
Lloyds’ share price future is uncertain
But since we aren’t out of the woods yet, I doubt if the recent recovery in Lloyds share price can be sustained. Institutional investors, for instance, are losing confidence in the stock, which says something about its prospects. Hedge fund Marshall Wace shorted the stock in September according to an IG report. I think times are particularly tough for FTSE 100 banking stocks, making them underperformers at the stock market. But other finance companies, like asset managers, have been able to distinguish themselves the year.
Asset managers perform better
One of them is Scottish Mortgage Investment Trust (LSE: SMT), whose share price is at all-time high right now. According to SMT’s own assessment, its share price rose by 86% in the one year up to 31 August this year. Its popularity and performance is tied to its investments in the coveted Tesla stock. Essentially, buying shares in SMT gives the investors a piece of Tesla, along with other global companies that have seen fast growth, like Alibaba and Netflix.
I think SMT’s performance is particularly notable considering that more than 46% of its portfolio is in the consumer cyclicals’ sector, according to the Financial Times’ classification. And broadly speak, this hasn’t exactly been the year of cyclicals. They are always dragged down when consumer spending is at a low. But, with recovery expected in 2021, cyclicals should perform better, and relatedly, so should SMT. I think this is a stock to consider, despite its huge run-up in 2020.
FTSE 100 entrant to note
Another is the Intermediate Capital Group (LSE: ICP), a private equity fund and other financial solutions provider, that got bumped up to the list of FTSE 100 companies this year. Unlike SMT, ICP hasn’t yet put the stock market crash behind it. But, its stock price has risen. In fact, since the time I first wrote about it at the end of March, its share price is up almost 55%.
Now, we at the Motley Fool encourage investors to buy shares and hold them for at least a few years. But gains in relatively short time-periods are important to indicate if we are on the right path, or not. So far, it would appear that investing in ICP would have been a good decision at the time. Its last update, released in July, was optimistic about the company’s prospects as well. It also pays a dividend, which is an additional plus to the robust growth stock.
The post Forget the Lloyds share price! I’d buy these 2 FTSE 100 shares instead appeared first on The Motley Fool UK.
Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Alibaba Group Holding Ltd., Netflix, and Tesla. 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.
Motley Fool UK 2020