Is the Correction Already Over? 4 Bank Stocks to Buy
After President Trump’s victory, expectations of lesser regulations, federal corporate tax rate cut, stimulating domestic investments and anticipation of multiple Fed rate hikes have boosted investors’ confidence. These, in turn, led U.S. banking stocks to rally. Further, following the presidential election, mortgage rates were on an upswing, as money was pulled out of the bond market and yields on 10-year Treasuries climbed.
However, last month, the U.S. banks came under pressure with the flattened Treasury yield curve and fears among investors due to the delay in implementation of Trump’s financial policies. The sell-off in banking stocks followed an upswing in bonds which acted as a headwind. Moreover, a flatter yield curve turned negative for the U.S. lenders as borrowing is conducted on short-term markets and lending for longer periods.
Overall, the finance sector, which has been in the spotlight since the U.S. Presidential election results turned gloomy. The Financial Select Sector SPDR ETF XLF, which tracks the overall S&P Financial Select Sector Index, was down nearly 6% over the last month, while the S&P 500 Financials index declined 2.91%.
So would it be wise to stay away from banking stocks? The answer is no.
The correction seems to be over as the banking stocks rallied recently. Though the rally was supported by positive data on domestic economic growth, the positive sentiment about the industry’s prospects might have revived as well.
Against an improving domestic economic backdrop, the U.S. banks also have been taking aggressive strategic actions to power their financials. On the other hand, the Trump presidency is anticipated to bring brighter days for banks, moving ahead, with pro-growth policies and softer regulations. Thus, it would be a wise decision to add some banking stocks at this dip now.
Here, we present a handful of stocks that are expected generate solid returns.
Selecting the Winning Stocks
We have taken the help of the Zacks Stock Screener to shortlist banking stocks with a Zacks Rank #1 (Strong Buy) or #2 (Buy), and 7% or higher downward share price movement over the last four weeks.
Here are the top four financial stocks that meet the criteria:
Charlotte, NC-based Bank of America Corporation BAC is a diversified financial institution, providing various financial products and services to individual consumers, small and middle-market businesses, institutional investors, large corporations and governments globally.
Zacks Rank: #2
Market Cap: $239.3 billion
Price Change: -7.27%
You can see the complete list of today’s Zacks #1 Rank stocks here.
SunTrust Banks, Inc. STI, headquartered in Atlanta, GA, is engaged in providing various financial services to consumers, businesses, corporations and institutions in the U.S.
Zacks Rank: #2
Market Cap: $27.6 billion
Price Change: -7.91%
Bank of the Ozarks, Inc. OZRK, headquartered in Little Rock, AR, is a bank holding company for Bank of the Ozarks, providing various retail and commercial banking products and services in Arkansas, Georgia, Florida, North Carolina, Texas, Alabama, South Carolina, New York, and California.
Zacks Rank: #2
Market Cap: $6.3 billion
Price Change: -7.51%
Dallas, TX-based Texas Capital Bancshares, Inc. TCBI operates as the bank holding company for Texas Capital Bank, National Association, providing various banking products and services for commercial businesses, and professionals and entrepreneurs in Austin, Dallas, Fort Worth, Houston, and San Antonio metropolitan areas of Texas.
Zacks Rank: #2
Market Cap: $4.1 billion
Price Change: -7.48%
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SunTrust Banks, Inc. (STI): Free Stock Analysis Report
Bank of America Corporation (BAC): Free Stock Analysis Report
Bank of the Ozarks (OZRK): Free Stock Analysis Report
Texas Capital Bancshares, Inc. (TCBI): Free Stock Analysis Report
SPDR-FINL SELS (XLF): ETF Research Reports
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