When you invest in bank stocks, you are investing in institutions that offer credit cards, insurance, banking services and other financial services.
Since the banking industry is at the heart of the global economy, you should have some bank stocks in your portfolio. We have compiled some top stocks to help you make the most of them.
Traditionally, higher interest rates, like today, have been good for the banking industry. However, the relationship is a bit more complex than that.
If the interest rate rises too high, the economy slows down. As such, people borrow less, which affects banks. Nevertheless, the Federal Reserve has recently signaled that it could start lowering its rate.
During an announcement of the rates, Fed Chair Powell said they would consider cuts starting in September 2024.
Based on recent developments regarding monetary policy and the state of the U.S. economy, now would be a good time to invest in the banking sector. With GDP growing, banks will undoubtedly become a major beneficiary.
Here are the top three bank stocks to consider in August.
JPMorgan Chase (JPM)
JPMorgan Chase (NYSE:JPM) is one of the biggest banks in the world. It manages over $4 trillion in assets. Additionally, it has been one of the best-performing banks of 2024.
The stock has gained over 19% year to date and is up 33% in the past 12 months. Thanks to years of robust management, JPMorgan Chase was amongst the few to emerge unscathed during the 2023 banking crisis.
It also greatly benefited from the crisis, acquiring $92 billion in deposits, $173 million in loans and $30 billion in securities after First Republic fell. The bank had to pay the Federal Deposit Insurance Corporation around $10.6 billion to acquire these assets.
The First Republic deal was great for the bank. Not only did it help JPMorgan grow its portfolio but it also signaled the bank’s strong financial standing.
Since the banking crisis, JPMorgan has continued to perform exceptionally well. In its second-quarter results, the banking giant reported revenue of $50.2 billion, a nearly 20% increase compared to the $41.3 billion reported in the second quarter of last year.
Another upside to the bank is that it is ranked as a Category 1 bank by the Federal Reserve. That means it has undergone all important stress tests and passed at the highest level. JPM stock is the way to go as a safe investment with minimal risk.
Analysts agree with this assessment, giving the stock a buy rating. They forecast that its price could grow by an average of 2.20% to $212.53 from its current price of $199.14.
Based on its top-tier ranking by the Federal Reserve and its continued strong financial performance, JPM is one of the best bank stocks to buy in August 2024.
Wells Fargo (WFC)
Wells Fargo (NYSE:WFC) is one of America’s biggest banks. Its operations are mostly focused on the U.S., managing over $1.9 trillion worth of assets.
The banking behemoth is undergoing a major restructuring after missteps in recent years. The issue was that employees opened numerous fraudulent savings accounts without consulting customers.
Due to the 2018 scandal, the Federal Reserve capped its assets at $2 trillion. To date, those restrictions are still in place. Despite this cap, the bank has continued to perform well.
In its most recent results, Wells Fargo reported revenue of $20.7 billion, while net income came in at $4.9 billion. As of 2024, the bank is also rated as a Category 1 bank by the Federal Reserve. It shows that it is one of the best banking stocks to hold, with a top-tier rating from the main banking regulator.
In terms of financial performance, WFC has performed quite well in 2024. It is up 7% year to date and 21% in the past 12 months.
Analysts remain upbeat about the stock’s future performance. They predict it will rise by 10.81% in the next 12 months to $63.03 from the current price of $53.26.
Citigroup (C)
Citigroup (NYSE:C) is a diversified bank that offers numerous banking services worldwide. The bank was among the most affected by the 2008 financial crisis. However, it has since worked on turning the situation around with awesome results.
In its most recent results, the bank reported revenue of $20.1 billion, up 4% from the year-ago figure on strength from its banking and trading business. Net income came in at $3.2 billion, a 10% increase, for per-share profits of $1.52.
Its stock performance has been exceptional, rising 9% year-to-date and 31% in the past 12 months to nearly $60.
If you are looking for great banking stocks to purchase in August, Citigroup should be on that list.
On the date of publication, Joel Lim 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
