Lloyds Banking Group has often been labeled as a penny stock since 2009, with its share price remaining below 100p for the past 15 years. However, despite this, Lloyds is not a penny stock due to its market capitalization of £36.6bn, making it one of the largest companies on the London Stock Exchange.
Penny stocks are typically small enterprises with market caps below £100m and are known for their volatility, unlike Lloyds, which has been relatively stable around the 50p mark for over a decade. While penny stocks may offer growth potential, Lloyds has been lacking in this area.
The Lloyds share price has not been delivering significant returns, especially when compared to the FTSE 100 index. The collapse of interest rates following the 2008 financial crisis has posed challenges for banks like Lloyds in generating profits through lending programs, particularly mortgages.
Although Lloyds benefits from cash flow, a trait that many penny stocks desire, the bank’s shares are still influenced by interest rates beyond management’s control. For investors seeking businesses with more control over their destiny, Lloyds may not be the ideal investment option at present.