In a market where tech stocks are all the rage, stodgy old bank stocks have fallen by the wayside. And understandably so. Why bother with a sector that’s been a serial underperformer when Facebook Inc (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) are there for the taking?
Perhaps you’re looking to broaden your holdings to further diversify. Maybe you’re a believer in sector rotation or that bank stocks will eventually play some catch-up by outperforming to make up for lost time. Regardless, if Friday’s surge is any indication the sector looks ready to run. The Financial Select Sector SPDR Fund (NYSEARCA:XLF) broke above a significant downtrend line and now appears poised for a run toward last year’s highs.
To capitalize, check out these three bank stocks making a comeback.
3 Bank Stocks to Buy: JPMorgan Chase & Co. (JPM)
JPMorgan Chase & Co. (NYSE:JPM) kicks off the list with a rousing breakout of its own.
Friday’s rip was accompanied by heavy volume, suggesting the big boys were in mega-buy mode. The trend across all major time frames is moving higher for the first time in about a year. That means bulls have wrested control and have the opportunity to press their advantage.
Last week’s trendline break took out a major resistance level for JPM stock; one that had been hanging over the stock like a dark cloud for over a year. Slight profit taking is dropping the stock a notch or two today, but its a feint. As long as JPMorgan remains above $64 this dip is a buy.
Grab the Oct $65 call options once this retracement terminates. They’re currently trading for $2.80.
3 Bank Stocks to Buy: American International Group Inc (AIG)
American International Group Inc (NYSE:AIG) is arguably the strongest stock of the bunch. It’s ascent was kicked-off by an earnings announcement cheered by traders. AIG beat estimate handily delivering 98 cents earnings per share versus the expected 91 cents. The stock hasn’t looked back since.
AIG stock’s post-earnings run has carried shares back above the 200-day moving average. From a price perspective, it’s the healthiest the stock has looked all year. While I wouldn’t suggest piling in at these lofty levels, any kind of pullback should be viewed as a gift from the gods. Watch for a dip or at least some consolidation in the days ahead to setup a lower-risk entry.
Then, consider snatching up the AIG Oct $57.50 calls.
3 Bank Stocks to Buy: Bank of America Corp (BAC)
Bank of America Corp (NYSE:BAC) rounds out our list with a similar breakout.
Though not as rousing as its predecessors, BAC stock was able to sail through the 200-day moving average for the first time this year. BofA’s recent ascent has been a one-sided bullish onslaught. At least that’s what the volume patterns are telling. Accumulation days litter the landscape while high-volume down days are absent.
Profit taking may deliver a retest of the 200-day moving average this week. If BAC stock can remain above it, the future looks bright. Buy the Oct $14 calls.
As of this writing, Tyler Craig did not hold a position in any of the aforementioned securities.