Banking Stocks You Need to Consider Now

Companies / Banking Stocks Jul 31, 2015 - 02:17 PM GMT

Larissa James writes:As the Chinese stock market continues to crash, things on the home front are doing just fine. While we’ve seen industry averages drop slightly over the past few months, we still remain on a positive upward trajectory over the past five years. If you haven’t yet regained confidence after the 2008-2009 crisis, now is the time to get back in the game. And if you’re looking for a place to start, the following banking stocks should be top on your list:

1. Goldman Sachs (GS)
It may strike you as odd that the first stock on the list isn’t even technically a banking stock, but for all intents and purposes we’ll consider it one. After all, the government essentially labeled it a commercial bank during the financial crisis – despite being a traditional investment bank.

“It runs proprietary trading, it underwrites tock and bond issues, it’s involved in commodities and it acts as an advisor to major institutions,” writes Dana Blankenhorn, tech journalist and writer. “It puts its capital at risk in many ways, and earlier in the cycle I found it a dodgy business.”

Not any more, though. Because Goldman is willing to take risks that other commercial banks typically won’t take, it’s also able to accrue much bigger rewards. While the global economy is currently pretty weak with the crises happening in Greece and China (and a weakening Euro), the U.S. economy is quite strong. This means there is ample opportunity for Goldman to profit. The company brought in $19 billion last year and another $6.8 billion during Q1 of this year. Its operating margin is an excellent 33 percent, and all signs point towards steady growth.

2. Wells Fargo (WFC)
Over the past couple of years, Wells Fargo has delivered some big-time returns to its investors. Its market capitalization just reached $300 billion and stock prices have consistently improved since Q3, 2009. Very few banks and financial institutions can boast a track record like that.

“We have a steadfast approach as far as the culture, the vision and the focus,” says Mary Eshet, Wells Fargo spokeswoman. “And before the financial crisis, and before we completed our merger with Wachovia in 2008, I don't think anyone on Wall Street paid much attention to us.” You’d be hard-pressed to find anyone who isn’t paying attention now.

As an investor, you can rest easy knowing that Wells Fargo has a very diversified ‘portfolio.’ It has 90 different lines of business, divided into four different lines (brokerage and retirement, community banking, consumer lending, and wholesale banking). It’s that safety net that’s appealing for many.

3. J.P. Morgan Chase & Co. (JPM)
According to a recent analysis by TheStreet Ratings Team, JPMorgan Chase & Co. is one stock you’ll want to keep an eye on. The report states, “JPM’s revenue growth has slightly outpaced the industry average of 0.0%. Since the same quarter one year prior, revenues slightly increased by 3.3%.” This growth has helped boost the earnings per share.

In fact, the stock has risen so fast that it’s faster than the S&P 500’s overall pace. Earnings per share improved by 13.3 percent in the most recent quarter (compared to last year) and the bottom line during the past fiscal year is up to $5.29 (versus $4.32 in the previous year). All of these are positive sings for a healthy financial future.

Use these Stocks to Anchor Your Portfolio

While you never want a stock portfolio that’s industry-heavy, these five financial stocks all have promising futures. It wouldn’t be a bad idea to use these as the anchors for your new stock portfolio. Diversify around them and you’ll likely find yourself in the black in the years to come.

By Larissa James

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.