Money In The Bank: Lloyds TSB Bank Penny Stock LYG

The British version of Bank of America Corp. (NYSE: BAC) received its second upgrade for the month of May on the penny stock by the firm that fed the London Whale. Lloyds TSB Group plc (NYSE: LYG)(LSE: LLOY.L) shares were upgraded by Wall Street analysts at JPMorgan Chase from an “underweight” rating to a “neutral” rating on Wednesday. The penny shares of LYG stock closed down -6.13% at $1.53 on volume of 1,803,768. This is the second upgrade, although not as prolific, that the multi-listed Billion dollar penny stock of Lloyds Bank received this month. On May 4th, LYG was upgraded by Wall Street analysts at WestLB to a “buy” rating.

The Question Is: Could the bank across the pond, the largest retail bank in the UK, be undervalued?

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LYG Stock Chart

Market Cap: 26.22B
Price/Sales (ttm): 1.36
Price/Book (mrq): 0.39
Book Value Per Share (mrq): 4.20

52-Week High
(Jul 1, 2011): 3.26
52-Week Low
(Nov 23, 2011): 1.33

50-Day Moving Avg: 1.86
200-Day Moving Avg: 1.88

Avg Vol (3 month): 1,634,220
Avg Vol (10 day): 1,463,710

Shares Outstanding: 17.14B
Float: 10.39B

Lloyds Banking Group plc’s penny stock is currently priced at -18.35% below its 50 day moving average, -18.79% below its 200 day moving average, and -53.07% below the 52 week high of $3.26. From a technical perspective, everything is screaming sell on LYG:

Composite Indicators Signal
TrendSpotter Sell
Short Term Indicators
7 Day Average Directional Indicator Sell
10 – 8 Day Moving Average Hilo Channel Sell
20 Day Moving Average vs Price Sell
20 – 50 Day MACD Oscillator Sell
20 Day Bollinger Bands Hold
Short Term Indicators Average: 80% Sell
20-Day Average Volume – 1,439,020
Medium Term Indicators
40 Day Commodity Channel Index Sell
50 Day Moving Average vs Price Sell
20 – 100 Day MACD Oscillator Sell
50 Day Parabolic Time/Price Sell
Medium Term Indicators Average: 100% Sell
50-Day Average Volume – 1,537,074
Long Term Indicators
60 Day Commodity Channel Index Sell
100 Day Moving Average vs Price Sell
50 – 100 Day MACD Oscillator Sell
Long Term Indicators Average: 100% Sell
100-Day Average Volume – 2,029,016
Overall Average: 96% Sell


Liars Can Figure, But Figures Don’t Lie

The typical retail investor would likely follow the flow above and sell LYG stock to cut their losses before throwing themselves into trying to understand every comment the ECB makes while Greece, Spain and Italy all drive down the value of the Euro and its affect on Lloyds Bank. However, the contrarian investor with a long position sees this as a perfect opportunity to buy LYG stock. Why?

For the quarter ended March 31, 2012, Lloyds Banking Group reported:

Total Cash (mrq): 446.78B
Total Cash Per Share (mrq): 26.07
Total Debt (mrq): 400.86B

Hence, Lloyds Bank is liquid and liquidity means opportunity for the retail bank that hosts accounts for over 30 million people. And, how about cheap dividends? Currently, Lloyds Banking Group is prevented from paying dividends on its ordinary shares as a result of the European Commission state aid review. However, dating back just to 2008 when the US housing market collapse and the mortgage fraud derivatives were sold off to the Europeans, LYG was paying its U.S. shares dividends of:

2008: $0.8062,2007: $2.8408, 2006: $2.6744, 2005: $2.4791, 2004: $2.5393, 2003: $2.3916, 2002: $2.1604, 2001: $1.9405

Until that 2008 global economic crash, the Yankee shareholders got almost twice as much in dividends as the penny shares are trading at today.  That’s like taking in a buy-one, get-one free coupon to your broker each year if you can hold on to your coupons for awhile patiently.

To find out more about Lloyds Bank and LYG stock, visit:

Bottom Line: Lloyds TSB shares, LYG stock, is on the list of penny stocks to watch and sit on for 3-5 years while the EU sorts itself out. Our English speaking neighbors across the pond will survive as they always have done through times of turmoil since they controlled over 60% of the globe just 300+ years ago.

LYG stock is a bargain at this price if you can sit on it. It’s a multi-Billion dollar, multi-listed global company with the largest presence in the strongest currency in the world. Buying LYG shares is like putting money in the bank.

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