Bank stocks that could be set to rise in 2022
With many stocks off to a turbulent start in 2022, investors interested in putting some money to work need to be extra cautious at this time. Stock markets are becoming increasingly divided, with value stocks outperforming growth stocks due to the complex factors that come into play with the Federal Reserve and the economy. This may be a trend that will continue to emerge over the next few months, which is why it is useful to focus on areas of the market such as the financial sector that offer reasonable valuations and show relative strength.
Several accounts support the addition of some of the best banking stocks at this time, including the continued recovery of the economy and impending interest rate increases from the Federal Reserve. It’s also worth noting that many of these bank stocks have been consolidating their 2020 gains by several months, which tells us that investors have been building stocks for what could be another boost. With attractive dividends, solid balance sheets, and attractive P/E ratios compared to the S&P 500, these are the companies that may definitely be worth adding in the coming weeks.
Here are the 3 best-in-class banking stocks you can buy right now:
If you’re an investor who expects the Federal Reserve to take quick action in order to combat the effects of inflation, Bank of America is probably the best way to play up rising interest rates. That’s because it’s a company with one of the highest levels of net interest income versus competitors in the sector, which means Bank of America’s revenue would jump even more if interest rates were to rise. It is also a company with one of the strongest brands in retail banking, with a truly unparalleled network of retail branches and services including mortgage lending, vehicle lending, credit and debit cards, and small business services.
There’s a lot to like about the company’s global wealth management and investment business, which posted net revenue growth of 16.8% year over year in the third quarter. With total customer balances recently reaching a record $3.69 trillion, it’s clear that wealthy and wealthy investors are trusting Bank of America with their business more than ever before. Finally, the fact that Bank of America stock has reached levels not seen since the early 2000s tells us that the stock is in great demand in a market filled with uncertainty.
Morgan Stanley (NYSE: MS)
This leading financial services company is a great choice for investors interested in exposure to the sector, as its operations in investment banking, securities, investment and wealth management provide a stable business model that investors should be able to rely on with a slim. Morgan Stanley is well positioned to benefit from higher interest rates, which should provide a boost to the company’s revenue, while risks such as inflation and an uneven economic recovery could continue to drive trading revenue throughout the year. The company reported revenue of $14.8 billion, up 26% year-over-year, in the third quarter, and is preparing to deliver another strong report on January 19.
Investors should watch how the stock performs before the earnings release, as there is a chance of a Morgan Stanley break before the report after months of the merger. Pay close attention to investment banking and asset management revenue in the fourth quarter, which was a major contributor to the company’s impressive fourth-quarter results, and should continue to drive earnings growth after the acquisition of Eaton Vance. Finally, Morgan Stanley’s recent doubling of its quarterly earnings and authorized share buyback program after the Fed’s stress test serves as a reminder of how the best-in-class financial stocks consistently reward long-term shareholders.
Finally, we have another one of the world’s largest diversified banking firms, JPMorgan Chase. With approximately $3.8 trillion in assets and operations in retail and community banking, corporate and investment banking, commercial banking, and asset and wealth management, this is a best-in-class bank that has developed a truly dominant market position both in the United States and abroad. . It is a bank with strong competitive advantages such as industry-leading banking and financial technology, strong operating efficiencies, conservative underwriting, and a long history of profitability.
Many of the factors mentioned earlier in the article will benefit JPMorgan Chase, including potentially higher interest rates and an increasingly strong economy. There’s also a lot to like about how JPMorgan Chase trades at lower multiples than the other banks on our list. Finally, a dividend yield of 2.42% and plenty of capital to use for expansion opportunities are additional reasons why this is a great option to consider adding from the financial sector. Just remember that JPMorgan Chase will report its fourth-quarter earnings on January 14th, which could cause some volatility in the stock price.