As we get into earnings season, all eyes are on bank stocks this week. The big bank stocks and a few of the regionals will be reporting earnings, but as we wrote earlier this week almost all of them are ranked as holds or even sells by Portfolio Grader. There are four buys but no strong buys among the money center banks and larger regional bank stocks.
As we saw with the JP Morgan (JPM) and Wells Fargo (WFC) reports on Tuesday, it is just very difficult for the larger banks to generate revenue and profit growth right now, and I really do not see that changing anytime soon. However, that is not to say we should entirely write off bank stocks this earnings season.
When we look at the smaller regional and community banks, we find that there are several stocks ranked as “strong buys.” Focusing on these will allow us to go into this earnings season locked and loaded with the banks that have the very best fundamentals.