5 Best Stocks Under $10 in 2021

4. Lloyds Banking Group plc (NYSE: LYG)

Number of Hedge Fund Holders: 5

Lloyds Banking Group plc (NYSE: LYG) is a UK-based company that provides financial services to more than 30 million customers. It is also one of the largest employers, with 65,000 employees, in the region. It ranks 4th on the list of 10 best stocks under $10 in 2021.

Lloyds Banking Group reported stable credit demand in Q4 2020 and is optimistic about lower credit charges this year. The company announced that Horta-Osório plans to resign from his CEO position and the end of April. Charlie Nunn, the former head of the wealth and personal banking division at HSBC, will become Lloyd Banking Group’s new CEO.

Here is what Oakmark Global Select Fund has to say about Lloyds Banking Group plc in their Q4 2020 investor letter:

“U.K.-based retail bank Lloyds Banking Group was a large contributor for the fourth quarter, which marked a sharp reversal of the stock price decline realized in the third quarter. Positive Brexit deal developments helped boost the share prices of European-based companies, including Lloyds, in the fourth quarter and culminated in a late-period trade agreement between the U.K. and European Union that formalized a new economic and security partnership. Lloyds also released third-quarter earnings that we found to be reasonable considering present macroeconomic conditions. For the full fiscal nine-month period, total revenue fell 17% and underlying operating profit declined 85% from a year earlier. Results were significantly impacted by impairment charges that rose dramatically (+334%) for the full period. However, the vast majority of the impairment charge increase occurred in the first two quarters and eased in the third quarter, which helped drive strong sequential growth of underlying operating profit, totaling GBP 1.2 billion. Other important metrics showed evidence of improvement as well, including retail deposits that rose 7%, which resulted in a loan to deposit ratio of 98%, reflecting a healthy liquidity position. Importantly, Lloyds’ balance sheet remains strong as its Tier-1 ratio reached 15.2% in the third quarter (up from 14.6% in the second quarter), which exceeded both management’s target of 12.5% and regulatory requirements of roughly 11%. Management cited additional encouraging signs of a business recovery, including increased mortgage activity, which we think positions the company advantageously as the general economy normalizes. As we have expressed previously, we contend that Lloyds possesses a wide range of strengths to draw upon to reinforce its business during current near-term challenges. Even including its strong fourth-quarter stock price performance, we still believe the company’s shares are undervalued compared with our estimate of intrinsic value.”