Should Investors Invest In Bank Stocks Now?
Bank stocks have held up on a brutal day for the stock market. Since most bank stocks, if not all, have taken a beating this year, investors have plenty to fear. With the federal funds rate to remain near zero through 2022, the banks suffered another blow. But most concerns have appeared to have subsided. This is after the banking industry surprised the market with its excellent second-quarter reports.
As Matt O’Connor from Deutsche Bank puts it: “At this point, a further meaningful lag seems unlikely and there’s an argument to be made that bank stocks should catch up a bit versus the broader market,” He added that there’s a “good chance” the bulk of banks’ loan loss reserve building is done, and noted capital markets and mortgage revenue are both strong, while fees from service charges, card income, and investment and brokerage continue to rebound.
The banking sector has lost a lot of ground with most bank indexes falling more than 20% since the beginning of the year. Still, some top bank stocks to watch have managed to shrug off the uncertainty from the pandemic. They even manage to maintain their stock prices within a narrow range of the price at the start of the year. Here is a list of top quality bank stocks that could be worth the risks.
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Top Bank Stocks To Buy Right Now [Or Avoid]: JP Morgan Chase & Co.
The largest bank in the U.S. JP Morgan Chase (JPM Stock Report) tops the list when it comes to the best bank stocks to buy. JPM stock jumped 47% in 2019. Shares of JPM buck the broad market sell-off on Thursday after analyst Matt O’Connor turned bullish on the banking giant, citing “attractive valuation” given an improved outlook for the sector.
The banking giant also pushed ahead with a new credit card that focuses on travel and dining as Capital One (COF Stock Report) trims credit limits amid the coronavirus pandemic woes. And that’s not because Capital One doesn’t want to expand their lending business.
But it’s because the bank is exposed to a higher risk of not knowing its current employment and income status. JPM will now obtain that information as consumers apply for that new card. It is trying to appeal to potential customers who are able to spend money traveling after the pandemic.
Top Bank Stocks To Buy Right Now [Or Avoid]: Bank Of America Corp.
If there’s another sector to buy amid the astronomical valuation of tech stocks, it could be the banking stocks. Like JP Morgan, Bank of America Corp. (BAC Stock Report), also received a bullish rating from the same analyst. Not to forget Warren Buffet just increased his stake in BAC to 11.3% recently. Buffett’s higher bet on BAC stock signals he’s actively hunting for bargains again.
And he is willing to add to his existing holdings at the right price. So if the legendary investor thinks that BAC is now at a bargain, should investors follow suit? I guess it’s reasonable to assume that we will see an increase in trading activity for BAC stocks.
We know it has a strong balance sheet and the ability to generate solid profits even during the peak of the global health crisis. There’s a great chance BAC stock could bounce back strongly in no time. Many experts believe that BAC stock is trading at a huge discount considering the fact that the net payout yield is still a strong 12.5%. With all this in mind, would BAC stock be attractive enough for you to include in your portfolio?
Top Bank Stocks To Buy Right Now [Or Avoid]: Banco Bradesco SA
One of the most active bank stocks on Thursday, Banco Bradesco SA (BBD Stock Report) is one of the best bank stocks to trade this week. While it is not as famous as Goldman Sachs (GS Stock Report) or Morgan Stanley (MS Stock Report), it is definitely a leader in its own market. Banco Bradesco is Brazil’s fourth-largest bank, with about 15% of deposits. It is the largest insurance provider in Brazil, with roughly 25% market share. The bank provides services through a network of more than 4,600 branches, the largest footprint of all privately controlled banks in Brazil.
As some US banks continue to reduce their operations in Brazil, Banco Bradesco continues to increase its market share there. BBD stock is trading higher on Thursday along with shares of several Brazilian companies.
This came after the Brazilian government announced the extension of emergency aid. With the Brazilian government as their shareholders, many analysts have revised their ratings to “Stable” for BBD stock. With so much growth ahead in the post-pandemic world, would you invest in BBD stock today?