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Looking For Cheap Bank Stocks To Buy? 2 To Know

These financial institutions have been beaten down by the pandemic; are they set for a rebound yet?

bank stocks

Banks Reported Their Earnings Last Week; Should Investors Buy Bank Stocks Now?

Bank stocks have been one of the hardest-hit sectors since the pandemic began. Since most bank stocks, if not all, have taken a beating, investors have plenty to fear. With federal funds rate to remain near zero through 2022, the banks suffered another blow. But most concerns have appeared to subside after the banks have revealed the second-quarter reports last week. One thing to note from last week’s earnings is that investment banks have performed better than commercial banks. The quarterly results, with the exception of Wells Fargo (WFC Stock Report), were far better than what many expected.

Some investors don’t seem to understand the new accounting rules. This makes it very difficult to understand how good the bank earnings have been during the pandemic. That said, investors may soon realize their concerns are overblown and have been punishing bank stocks unfairly. If we take a look at the Financial Select Sector ETF (XLF Stock Report), it is still down by 20%. Here’s the thing, with the “better” than expected quarterly results, could bank stocks be the next to rally?

The pandemic has certainly created tremendous uncertainty about consumers’ ability to repay their loans. And the record-low interest environment isn’t entirely doing any good for banks to improve their profits. Some are even blaming the accounting regulators for a lower pre-tax income. But even if there weren’t any changes to the accounting rules, it would still be lower than the 2019 levels. The big question here is, would it have made any difference to the stock valuation? I’ll leave that for you to answer. Now that bank stocks are showing some signs of a rebound, should investors buy bank stocks right now?

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Cheap Bank Stocks To Buy Right Now [Or Avoid]: Bank of America Corporation

If there’s another reason to buy banking stocks, for instance, Bank of America Corp. (BAC Stock Report), it is because Warren Buffet just increased his stake in BAC to 11.3%. Buffett’s increased bet on BAC stock signals he’s actively hunting for bargains again, and 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 today.

For the record, Berkshire owns shares of several other large banks too. However, most are well below the 10% threshold. The company owns just 1.9% of JPMorgan Chase (JPM Stock Report), 8.4% of Wells Fargo, and 2.2% of PNC Financial (PNC Stock Report). If we look at Buffett’s holdings in bank stocks, it is obvious that BAC stock is still his favorite. If we look back at this year’s trading record, BAC stock is down 31% year to date, an attractive valuation for the legendary value investor. 

[Read More] Should You Buy Top Tech Stocks On Their Dips?

Cheap Bank Stocks To Buy Right Now [Or Avoid]: Goldman Sachs

To say Goldman Sachs (GS Stock Report) blew past analyst’s expectations during its second-quarter announcement was a major understatement. This is because the revenue came in $3.5 billion higher than Wall Street’s estimates. This represents a revenue growth of 41% year over year, fueled by the institution’s highest trading revenue in nine years and extremely strong results in both debt and equity underwriting.

More importantly, investors might want to take a closer look at GS’s long-term potential in the consumer banking business. Take, for example, the Apple (AAPL Stock Report) Card. This is a credit card that Goldman issues. And it is one of the most successful credit card product launches. The good news is, it continues to thrive despite the market environment.

Despite its astonishing results from the investment banking segment and the compelling potential of its consumer banking business, Goldman is currently trading at $203 per share and is still 13% lower than where it was the beginning of this year. Since the company has rebounded strongly from its March lows, this also signals that it is more resilient than other banking stocks in the market. Considering this bank stock has lots of potential upsides, would it be a wise move to buy GS stocks now?

By Joe Samuel

Joe Samuel is a dedicated stock market researcher and financial contributor. His love for the stock market started at a young age learning from his grandfather. Joe earned a bachelor of science degree in corporate finance and business management. After finishing college, he went the route of an entrepreneur starting numerous businesses and eventually became a financial contributor to a number of outlets including Seeking Alpha, Invesitng.com, and actively contributes to FactSet. At StockMarket.com, Joe looks for emerging stories. One of his traits is identifying new trends before they become mainstream. Whether it’s a biopharmaceutical company debuting a novel treatment or the next technology start-up developing a new platform, Joe looks to be on the cutting edge of that trend.

After years of living in New York, he made the move to Miami, Florida where he’s become an active member of the finance community. Joe has worked with early-stage companies in marketing and consulting capacities, which has given him an opportunity to see what makes companies tick. His viewpoint is that while corporate news is vital to any investment, it’s what isn’t “right in front of you” that can make a good investment great. His approach to the markets is one that aims to deliver information that might not be well-known. But through deep research and diligence, Joe has written about and been able to uncover time-sensitive information when seconds matter in the stock market today.

Joe enjoys covering several stock market sectors. These include commodities, finance, biotechnology, and technology; specifically AI & machine learning. His no-nonsense approach to the market gives readers a cut and dry view of the news that matters most and topics beginning to emerge as new trends in the stock market. He was early to the table with calls on things like the last gold rush in 2019 and has been able to identify influential events and how they could impact certain industries.

During his free time, he enjoys spending time with his family and polishing up one new stock market trends. He’s also an avid car enthusiast with a passion for classic and muscle cars.