After poor earnings and revenue figures from financial stocks such as Citigroup (NYSE: C) and Bank of America (NYSE: BAC) recently, the outlook for the sector been hazy. Downbeat economic news that continues to weigh on banks, including high foreclosure rates and high unemployment, suggests things might stay that way for some time.
That means investors need to think about new investing strategies for financial stocks and consider getting rid of bank stocks with dwindling value. As a growth investor, I rarely recommend financials because they simply don’t have the fundamental strength I look for because of their business models. It’s nearly impossible for a bank to post dramatic year-over-year earnings and sales gains consistently, and I never invest in a company that doesn’t have strong growth potential.
While a few financial stocks do stand out from time to time, what I’m struck by most right now is the number of financial stocks that aren’t living up to their potential and could have investors cashing out very soon. To help you avoid future declines, here’s my lineup of 10 famous financial stocks to sell immediately:
HSBC Holdings (HBC)
Market Cap: $179.34 billion
Dividend Yield: 3.12%
HSBC Holdings plc (NYSE: HBC) is a global banking and financial services company based out of London, UK. The British banking behemoth may be the world’s largest financial services group, but shareholder returns haven’t been reflecting that status lately. HBC slid into a downward trend last year and hasn’t found the momentum to reverse its path quite yet. HBC stock is down -9.23% since the start of 2010 and shareholders looking for a rebound are finding themselves out of luck lately – and could be waiting a while longer.
Bank of America Corp. (BAC)
Market Cap: $132.25 billion
Dividend Yield: 0.3%
Bank of America Corporation (NYSE: BAC) is a bank holding company and a financial holding company with more than 283,000 employees worldwide. After hitting a new 52-week low last Thursday, BAC stock has shown little indication that you should expect to see a rebound in the coming days. EPS estimates are down and earnings are projected to stay down through the end of the year on weaker revenue. This summer has been rough for shareholders with BAC down -19.2% since mid May.
Barclays (BCS)
Market Cap: $59.72 billion
Dividend Yield: 1.28%
Global financial services provider Barclays PLC (NYSE: BCS) made news this week when it agreed to pay $298 million to settle claims that it violated the Trading with the Enemy Act and the International Emergency Economic Powers Act by allegedly conducting illegal transactions with banks in Cuba, Iran, Libya, Sudan and Burma. BCS stock has taken investors on a wild ride this year with plenty of ups and downs; shares are down -6.98% from this time last week.
Citigroup Inc. (C)
Market Cap: $111.98 billion
Dividend Yield: N/A
Citigroup Inc. (NYSE: C) boasts approximately 200 million customer accounts and does business in more than 140 countries. But that scale has failed to help the stock out in the wake of mortgage related losses and slumping revenue. Citigroup share are down -5% in the last week alone, and off -20% from late April. Whatever swagger Citi had this year, it appears to be fading fast.
Credit Suisse Group (CS)
Market Cap: $52.62 billion
Dividend Yield: 4.02%
Credit Suisse Group (NYSE: CS) is a financial services company that provides advisory services, solutions, and products to companies and clients globally, as well as to retail clients in Switzerland. Shares of Credit Suisse have been on the decline since April and have not been able to reverse trajectory as quickly as the broader markets. With CS losing ground to the tune of -9.75% year-to-date, investors might wan to think about cutting their losses on Credit Suisse stock.
Goldman Sachs Group Inc. (GS)
Market Cap: $76.19 billion
Dividend Yield: 0.95%
The Goldman Sachs Group, Inc. (NYSE: GS) is a bank holding and a global investment banking, securities and investment management company which has slowly been slipping down the charts this past week. GS shares are down -7.64 points from this time last week and the stock failed to meet earnings estimates by a wide margin for the quarter ending in June of this year. Investors should be weary of this ominous trend in GS stock as of late, especially after earnings, and sell to avoid any further loss.
JPMorgan Chase & Co. (JPM)
Market Cap: $149.45 billion
Dividend Yield: 0.53 %
JPMorgan Chase & Co. (NYSE: JPM) is a financial holding company whose activities are organized into six business segments: Investment Bank, Retail Financial Services, Card Services, Commercial Banking, Treasury & Securities Services and Asset Management. Investors have had to watch as JPM shares have fallen -6.8% since it closed last Tuesday. Add to that the grim estimates for sales growth for the coming months, projected to be in the red until the year’s end.
Lloyds Banking Group (LYG)
Market Cap: $74.63 billion
Dividend Yield: N/A
Lloyds Banking Group plc (NYSE: LYG) is a financial services group providing a range of banking and financial services, primarily in the United Kingdom, to personal and corporate customers in four segments: Retail, Wholesale, Wealth and International and Insurance. LYG stockholders have been holding their breath since shares plummeted at the start of 2010. Shares are down -29.53% from this time last year. Stock value has remained low since Lloyds agreed to pay $350m to settle the investigations from early 2009 after admitting it allowed Iranian and Sudanese clients to access the US banking system by altering wire transfer information.
Royal Bank of Scotland Group (RBS)
Market Cap: $42.40 billion
Dividend Yield: N/A
The Royal Bank of Scotland Group plc (NYSE: RBS) is the holding company of a global banking and financial services group. It operates in the United Kingdom, the United States, and internationally through its two principal subsidiaries. Considering that RBS stock was trading at over $200 per share a few years ago, and it nearly collapsed during the onset of the financial crisis, it is not hard to imagine why some investors are not keen on gambling with RBS. With shares struggling to break through the $15 mark, it could be a long time before investors can relive the glory days of RBS investing – such as the $200 adjusted share price RBS commanded five years ago.
Wells Fargo & Co. (WFC)
Market Cap: $132.82 billion
Dividend Yield: 0.79%
Wells Fargo & Company (NYSE: WFC) is a diversified financial services company that provides retail, commercial and corporate banking services through banking stores located in 39 states and the District of Columbia. In the past three months, WFC shares have lost -20.55% and estimates project negative numbers for growth in the current quarter. With its questionable business practices and failure to gain any ground on the broader markets in recent months, WFC could be trimmed from quite a few portfolios very soon.
As of this writing, Louis Navellier did not own a position in any of the stocks named here.
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