Betting on the best bank stocks to buy on the dip is a smart move ahead of a broader-market rally.

The banking space is rich and pivotal to powerful investment portfolios. Moreover, the sentiment surrounding the industry is positive after largely positive first-quarter (Q1) earnings across major U.S. banks. The consensus is that big banks have emerged stronger after two testing years, backed by a resilient economy and a spike in digital banking adoption. Additionally, the sector has embraced innovative technologies, like artificial intelligence (AI), to enhance customer service and operational efficiency.

Hence, with recession fears dissipating, the outlook for these three bank stocks remains mostly positive. These bank stocks, to buy on the dip, are effectively thriving in the current economic conditions and are well-positioned for future expansion ahead. Moreover, with rate cuts on the horizon, it’s an excellent time to invest in the best bank stocks offering robust upside ahead.

Nu Holdings (NU)

Nu Holdings (NYSE:NU), the powerhouse behind Nubank, has been one of the hottest fintech plays in the past year. It has effectively reshaped the financial scene, becoming a household name in the rapidly evolving Latin American region. In just ten years, Nubank has dazzled, capturing roughly 54% of Brazil’s adult population while expanding its vibrant presence into Mexico and Colombia.

It has operated a hyper-growth business over the years, marking a 5-year top-line expansion of more than 109%. Moreover, despite facing tough comps, Nu remains in full flight, with its customer base surging to 99.3 million, a 20% increase from the prior-year period. Moreover, its sales have surged to a record-breaking $2.4 billion, a 64% increase from the same period last year.  Also, despite operating in a challenging market, Nu stands out with seven consecutive profitable quarters.

Hence, with net income and adjusted earnings more than doubling recently, Nu’s financial positioning is amazing.

Wells Fargo (WFC)

Wells Fargo (NYSE:WFC) is a legacy financial services firm specializing in retail and wholesale banking that’s also coming off a stellar Q1.

Q1 marked the fifth consecutive quarter of top-and-bottom-line beats, leading to upwards of an 18% gain year-to-date (YTD). The company’s sales reached $20.86 billion, beating estimates by $711 million. Moreover, its EPS of $1.20 comfortably blew past forecasts by 11 cents.

Moreover, the banking giant’s prudent risk management was on full display as it set aside $938 million for credit losses, tailoring its credit loss allowance in response to shifts in real estate and motor vehicle loans. The firm is also investing heavily in its workforce and infrastructure, introducing new hiring initiatives and broadening its facilities in Virginia and New York.

Hence, this uptick in expansionary activity underscores the firm’s confidence in its future. Also, the bank repurchased $6.1 billion of its stock while yielding over 2.41%.

Bank of America (BAC)

Bank of America (NYSE:BAC) is another banking giant buoyed by its robust financial base and aggressive growth strategies. BAC was among the winners emerging from the regional banking crisis last year, attracting deposits from smaller banks. This shift led to a massive increase of nearly $14 billion to a whopping $2 trillion in Q1.

Further solidifying its financial health, BAC’s Common Equity Tier 1 (CET1) capital witnessed a stellar increase from $184.4 billion in Q1 2023 to $196.6 billion in Q1 2024. CET1 is a key measure of a bank’s financial maneuverability, illustrating BAC’s effective risk management and capacity to maintain a solid capital buffer,

Moreover, BAC has experienced a solid run-up in value in the past year, gaining upwards of 38%. Also, it yields a fantastic 2.43%, experiencing more than a decades-worth of dividend payout growth. Given its current excellent condition and encouraging outlook, BAC stock attracts a consensus moderate buy rating from Wall Street.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines