Given that financial stocks are going to benefit the most from the Fed rate hikes, this week's edition of U.S. News Invested featuring the industry's top 10 bank stocks seemed particularly appropriate this weekend, especially considering the horrors of the month we just left. Hope there's something useful here.
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Invested
Advice, rankings
and stock market news for investors.
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Good morning, investors. Markets fall on the last trading day of
the quarter and consumer spending slows.
Highlights of today's newsletter include our market insights plus these
new articles:
10
of the Best Bank Stocks to Buy for 2022
5
of the Best Stocks to Buy for July
9
of the Best Bond ETFs to Buy Now
How
to Invest in Marijuana
TODAY'S FEATURED STOCK STORY
10 of the
Best Bank Stocks to Buy for 2022
After a big year in 2021 and a hot start to 2022, bank
stocks have lagged along with the broader market this year. Aggressive
Federal Reserve interest
rate hikes could set up bank stocks for outsize earnings
growth in the next couple of years. However, exposure
to the Ukraine war and the possibility of slowing loan
growth have weighed on bank stocks as of late. Despite the recent
volatility, analysts say many bank stocks remain undervalued. Bank stocks
typically thrive in a higher-rate environment, but only if the U.S.
avoids a recession.
Here are 10
of the best bank stocks to buy in 2022, according to Wall
Street analysts:
Citigroup Inc. (ticker: C). As
of June 29, Citigroup shares are down 22% in 2022 and down 32% over the
last five years. Bank of America analyst Ebrahim Poonawala says Citigroup
may have reached "peak pessimism" when it comes to investor
sentiment. Citigroup shares trade at just 7 times forward earnings and
0.52 times book value. Poonawala estimates Citigroup's exit from Asian
markets could free up about $6 billion in capital in the next year, and
the sale of Banamex in Mexico could free an additional $4 billion to $5
billion in capital. Bank of America has a "buy" rating and a
$60 price target for C stock, which closed at $47.10 on June 29.
Fifth Third Bancorp (FITB). Fifth
Third Bancorp is a U.S. regional bank with more than $200 billion in
assets that operates primarily in the Midwest and Southeast. Poonawala
says Fifth Third's valuation is attractive, with the stock trading at
just 8.6 times his 2023 earnings per share estimate. In addition, he says
the bank has significant market share opportunities in the Southeast and
potential earnings growth upside from rising interest rates. Poonawala
says Fifth Third management has successfully implemented the bank's
clearly defined technology strategy.
Bank of America has a "buy" rating and a $46 price target for
FITB stock, which closed at $34.21 on June 29.
Click
here to continue reading.
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10 of the best bank stocks to buy for 2022:
- Citigroup Inc. (C)
- Fifth Third Bancorp (FITB)
- HSBC Holdings PLC (HSBC)
- KeyCorp (KEY)
- Wells Fargo & Co. (WFC)
- East West Bancorp Inc. (EWBC)
- Signature Bank (SBNY)
- Bank of America Corp. (BAC)
- JPMorgan Chase & Co. (JPM)
- M&T Bank Corp. (MTB)
M&T Bank Corp. (MTB)
M&T Bank is a commercial-focused, U.S. regional bank that operates in eight states in the Northeast and mid-Atlantic region. As of June 29, M&T shares are up 5.7% this year, making HSBC and M&T the only two bank stocks on this list that have generated a positive return so far in 2022. Poonawala says M&T has underappreciated, pent-up earnings power following its acquisition of People's United Bank. Poonawala says M&T's recently updated guidance for 50% spread revenue growth in fiscal 2022 is extremely bullish. Bank of America has a "buy" rating and a $210 price target for MTB stock, which closed at $162.33 on June 29.
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