Are Lloyds shares the best no-brainer buy for a 2025 Stocks and Shares ISA?

Looking for ideas for a Stocks and Shares ISA, surely it’s best to buy shares in great companies when they’re cheap, isn’t it?

I’d say a definite yes to that, but with two very big caveats. One, we really need to be sure we’ve found a genuinely great company. And two, we have to be able to distinguish the good ones from those that deserve to be down.

One thing that means is that I almost never see any investment possibility as a no-brainer. But I think it’s entirely possible to weigh up the chances for Lloyds Banking Group (LSE: LLOY) without needing brains like billionaire investor Warren Buffett.

Up, but still cheap?

The Lloyds share price is actually up 30% in the past 12 months. And it’s almost back in positive territory over five years. But that’s still an underperformance against the FTSE 100 since the early days of 2020.

And Lloyds is a mere shadow of its former self from before the 2008 banking crisis. But it’s no use harking back to those old days. No, we need to look at today’s very different Lloyds.

So how do I go about rating the bank’s value as a Stocks and Shares ISA candidate for 2025 and beyond?

I’m going to come back to Warren Buffett again.

Rule number 1

Buffett’s first rule of investing is “never lose money.” And his second rule, famously, is “never forget Rule 1.“

So what things could cause Lloyds shareholders to lose money in 2025? I think the main fear is the car loan mis-selling issue. So far, Lloyds has set aside £450m to potentially cover its obligations, but other than that it’s being tight-lipped about it.

Some observers think it could ultimately cost Lloyds up to £1.5bn. It looks like we’ll have to wait for the annual results due on 20 February to hear the Lloyds board’s updated take.

The other thing that investors seem worried about is interest rates. Falling rates should mean tighter margins for mortgage lenders. But the other side of that should be more borrowers and fewer defaults.

A Lloyds price jump today (16 January), when news broke of December’s lower-than-expected inflation figures, seems to show the markets are positive about the possible effects.

Against the crowds

The Lloyds share price rise might make it look like the crowds are behind it. But it’s way behind the progress that Barclays and NatWest Group have made in the past 12 months. And I’d say that has to be due to the fears I’ve looked at here.

So I think that the best time to consider adding a company to a Stocks and Shares ISA might just be when it faces its greatest short-term uncertainty. Providing we’re convinced it can overcome it and has a positive long-term future. Oh, and the price is right.

It’s nowhere near being a no-brainer rule, and it’s not for the faint-hearted. It’s for investors who don’t mind going against the crowds. Does sounds like Warren Buffett yet again? I rate Lloyds as one to consider for a 2025 ISA.

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Alan Oscroft has positions in Lloyds Banking Group Plc. The Motley Fool UK has recommended Barclays Plc and Lloyds Banking Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.