My call on the Lloyds share price has been right so far. Here’s what I’d have bought instead!

Back in April, I remarked that any suggestion the battered Lloyds Bank (LSE:LLOY) share price could recover strongly felt “very optimistic.“

Six months on and my view hasn’t changed. Nor has the company’s valuation.

Lloyds share price: going nowhere?

The problem with Lloyds, and indeed all banking shares right now, is that they face so many headwinds. 

First, there’s the economic impact of the coronavirus. Back in April, I warned that a significant second wave and further economic pain could scuttle any chance of a comeback in the near term. We could be about to experience the former. The latter is already a given.

Factor in the possibility of interest rates remaining at historic lows and messy Brexit negotiations (if that’s not already a given) and the investment case remains pretty weak. Bargain hunters will point to Lloyds’ low price-to-book value and far healthier financial position compared to during the Financial Crisis. This, however, doesn’t mean the Lloyds share price can’t get cheaper.

It’s also worth pointing out that, by yesterday, the shares were the fourth most sold by investors with Hargreaves Lansdown over the last week. They were only the 13th most popular buy, based on the number of deals.

Anyone with stacks of patience might want to stick with the shares in the hope the dividend is resurrected (or we get a coronavirus vaccine). Personally, I think there are far better opportunities elsewhere. Speaking of which…

Better buy

My far-more-bullish call, online trading provider CMC Markets (LSE: CMCX) back in July 2019, has proved very rewarding so far. Had you bought its shares back then, you’d now be sitting on a gain of 280%. Even those buying back at the end of April this year would have seen their money grow 70% by yesterday’s close!

Now, let’s be clear. CMC’s dramatic rebound has been helped massively by the volatile markets we’ve experienced for much of 2020. Companies like this thrive in troubled times.

Nevertheless, CMC’s good fortune (from a business sense) doesn’t negate the fact that we should always be out to snap up quality stocks when they go on sale. Back in 2019, no one wanted a piece of the mid-cap. Based on this morning’s trading update, that was the perfect time to invest. 

Record performance

Today, CMC reported achieving a record trading performance over the first half of its financial year.

Contracts For Difference net trading revenue came in at roughly £200m in the six months to the end of September. This is far better than the £85m made over the first half of 2019. Elsewhere, net revenue from its growing stockbroking division — a key part of CMC’s diversification strategy — is expected to nearly double from £14m last year to £26m in H1 2021.

All told, management believes net operating income will be “towards the upper end of the current range of consensus,“ albeit with higher costs than previously expected.  

Shares in CMC Markets were down in early trading, suggesting that some in the market are banking some profit. After such a storming share price run, I can’t blame them. 

Then again, with the forthcoming US election being another potential catalyst for volatility and client retention “remaining strong,” I’m inclined to think the shares could still move higher.