LONDON -- Last week, Britain's bombed-out banking sector was in demand with the retail clients of stockbroker TD Direct Investing. The most popular "buy" of the week, for instance, constituting 17% of all "top 10" buys, was Lloyds Banking Group (LSE: LLOY.L ) .
Surprised? Perhaps you shouldn't have been. Up more than 50% this year on the back of a persistent trickle of good news both from and about the beleaguered bank, Lloyds has somewhat ironically become one of the market's best-performing shares this year. Throw in last week's good news from the Bank of England -- a 22 billion pound lending facility for Lloyds -- and investors' enthusiasm becomes understandable. That said, the bulk of Lloyd's likely medium-term gains are probably behind it, with yesterday's target price from Liberum Capital coming in at 45 pence.
Savvy private clients of TD Direct Investing were also loading up on Rio Tinto (LSE: RIO.L ) , where the upside seems more elastic. Certainly, the FTSE 100 mining stock is down by around 25% since February, while the broader index has stayed roughly constant.
Throw in a forecast price-to-earnings ratio of seven and a prospective yield of 3.7% -- roughly the FTSE 100 average -- and it's not too difficult to see the appeal. It's easy to overhype the role of cycles in these things, but to my view, Rio is a decent share on offer during a period of economic uncertainty.
Next up is another FTSE 100 stalwart fallen on hard times: Royal Bank of Scotland (LSE: RBS.L ) . The bank was the sixth-most popular pick by TD Direct Investing's retail clients last week, making up 8% of overall "top 10" buys.
Why? As with other banks, the Bank of England's 60 billion pound lending scheme is creating a positive backdrop, and a eurozone-inspired fall in the share price to 257 pence doubtless helped as well.
But more particular, perhaps, was a speech by chief executive Stephen Hester. The bank is well on the way to full recovery, he told a City audience at a bankers' conference, predicting that dividend payments would resume next year. The forthcoming float of its Direct Line subsidiary only adds to the interest.
Last up: Imagination Technologies (LSE: IMG.L ) , the seventh-most popular purchase by TD Direct Investing's retail clients last week, comprising 6% of the total "top 10" trades.
The impetus? Still more weakness in the price, including a 9% fall in a single day. While that might be small beer to those investors who have enjoyed Imagination's full 19-fold rise over just four years, "buying on dips" probably characterizes the behavior of the remaining investors who fancy the stock. That said, they'll need to keep reminding themselves that Imagination's shares are volatile and are linked to both the fortunes of major customer Apple and to the macroeconomic health of the economies where Apple's pricey products are sold.
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