Lloyds shares are very popular within the UK investment community. Every week, LLOY is one of the most traded stocks. I’m cautiously optimistic on the outlook for its shares. In the near term, I think the bank’s share price may continue to rise due to the fact that the UK economy is in recovery mode.
That said, there are plenty of stocks I’d buy over Lloyds today. Here’s a look at three UK shares I believe will outperform Lloyds over the long run.
Rightmove
One FTSE 100 stock I’d buy over Lloyds today is Rightmove (LSE: RMV). It’s the owner of the most popular property website in the UK, rightmove.co.uk.
I see Rightmove as a better long-term investment for a few reasons. Firstly, it has a strong competitive advantage. In the property website space, it’s the clear market leader. In banking, Lloyds is just one of many major banks.
Secondly, RMV is extremely profitable. Last year, RMV generated a return on equity (ROE) of 133%. Lloyds, by contrast, had a ROE of 4%.
On the downside, Rightmove is more expensive. Currently, its forward-looking P/E ratio is about 28, versus 8.3 for Lloyds. That valuation doesn’t leave a huge margin of safety.
I think this higher valuation is fair though. RMV is a high-quality company with a great track record when it comes to generating shareholder wealth.
London Stock Exchange
Another stock I’d buy over Lloyds today is London Stock Exchange Group (LSE: LSEG). It’s a leading global financial markets infrastructure and data company. Essentially, it owns the plumbing of the UK financial system.
One thing I like about LSEG is that it’s now a major player in the financial data space after its acquisition of Refinitiv. It provides data and technology that enables customers to execute critical investing and trading decisions.
Currently, it has over 40,000 customers across 190 countries. In the years ahead, the demand for financial data is likely to grow. So, London Stock Exchange is well-positioned for long-term growth, in my view.
There are risks here, of course. One is that the stock has a relatively high P/E ratio of 27. If growth is disappointing, the stock could underperform.
However, overall, I think LSEG has more potential for long-term growth than Lloyds, due to the fact that demand for data is rising.
Clipper Logistics
Finally, Clipper Logistics (LSE: CLG) is another stock I’d buy over Lloyds today. This small logistics company that supports retailers has gone from strength to strength in recent years on the back of the e-commerce boom.
Between FY2015 and FY2020, its revenues increased every single year by an average of 16%. So it’s been a much more consistent performer than Lloyds, which has seen its revenues fluctuate. For the year ended 30 April, analysts expect revenue growth of 31%.
Looking ahead, I expect CLG to keep growing. The beauty of this company is that it’s poised to benefit from both increased economic activity in the UK this year and long-term trends such as the shift to online shopping.
This stock has a market capitalisation of just £700m (versus £34bn for Lloyds) so given its size, it could be quite volatile. It’s not going to be suitable for all investors.
But I think it has a lot of long-term growth potential. For this reason, I’d buy it over Lloyds.