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Lloyds shares are among the most followed by British retail investors. We asked three of our free web site writers to rank the stocks they think will prove better investments over the next half decade, without knowing the names of others being considered – and we still got the same answer twice!
Alpha Group International
What it does: Multi-currency risk management specialist integrated into a full range of alternative banking solutions.
Written by Zaven Boyrazian. Major UK banks, such as Lloyds, play an important role in the UK economy. But they are not the only players in town. Alpha Group International (LSE:ALPH) is quietly taking market share in the corporate banking space. And so far, it has outperformed the titans of the industry.
Services offered include FX risk management, alternative banking, financing, and banking technology. These offerings are also provided by Lloyds' and Lloyds' corporate banking division. However, in most cases, it is more expensive for small businesses. This is where Alpha built its niche, translating to a 275% return over the past five years.
Obviously, Alpha is risk free. The financial sector is heavily regulated, and any breach, even by accident, can result in heavy fines. Hedging can cause serious damage if misused. And when financing is issued, borrowers may fail if they are not properly vetted.
Still, despite the dangers, Alpha continues to overcome the odds. And after scratching the surface of the entire market that can be fixed, there may be many more explosions to come.
Zaven Boyrazian is a shareholder of Alpha Group International.
Alpha Group International
What it does: Alpha Group International is a financial services business that provides financial risk management and payment solutions.
Written by Edward Sheldon, CFA. Lloyds shares look cheap today. But I think many other UK stocks will provide higher returns over the next five years.
One stock I believe could outperform Lloyds Alpha Group International (LSE: ALPH). It is an under-the-radar financial services company in the FTSE 250 index.
The company is growing faster than Lloyds today. In the last five years, its profits have increased.
It is also more risky than Lloyds. This is a business that could potentially double or triple in size in the coming years. I don't see that happening at Lloyds as it is a much bigger company now.
Another risk with Alpha Group International is that the company is led by a very driven founder (Morgan Tillbrook). If he were to leave the business, it might not enjoy the same level of success it has had in the past few years.
Overall, I think this stock has bags of potential. I own it in my portfolio and plan to stay invested for a long time.
Edward Sheldon is a shareholder of Alpha Group International
Taylor Wimpey
What it does: Taylor Wimpey is one of the UK's biggest housebuilders and also operates in Spain.
Written by Paul Summers. I think Taylor Wimpey (LSE: TW.) shares could overtake the banking behemoth. This is partly based on the assumption that the new government will change existing planning laws and move closer to achieving its goal of building 1.5 million homes over the next five years.
There are many caveats here. Housing stocks are notoriously volatile. If the economy goes down, I would expect the value of this stock to sink as it has in the past.
However, Taylor Wimpey is no slouch when it comes to generating income for investors. As I write, the dividend yield has reached 5.7%. That's in line with Lloyds and a lot more than I can get from FTSE 100 a clue.
With interest rates falling and the mortgage market becoming more competitive, I think the medium-term outlook for earnings – and the share price – is good.
Paul Summers has no position on Taylor Wimpey
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