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Zacks: 4 Bank Stocks to Buy Despite Low Rates, Other Challenges

Zacks: 4 Bank Stocks to Buy Despite Low Rates, Other Challenges
(Kevkhiev Yury/Dreamstime)

By    |   Tuesday, 03 December 2019 09:24 AM

Zacks Investment Research recently scoured the banking industry to determine the best such shares to buy now despite the lower interest rate environment.

“Several other macroeconomic matters, including the ongoing U.S.-China trade conflict, Brexit ambiguity and global slowdown fears weigh on investors’ sentiments. These factors have also resulted in a slowdown in capital investments by corporates,” Zacks explained.

“Despite these near-term concerns, strong fundamentals and prospects make several banks a good investing option,” Zacks said.

Zacks selected bank stocks that carry a Zacks Rank #2 (Buy) or better and have current-year earnings growth expectation of 10% or more. They also have market capitalization exceeding $2 billion and have rallied more than 15% year to date.

Here are the four bank stocks that met the above criteria:

  • First Horizon National Corporation (FHN) has rallied 22.1% so far this year. With a Zacks Rank of 2, the company’s earnings are expected to grow 14.2% in 2019. It has a market cap of $5 billion.
  • Shares of Hilltop Holdings Inc. (HTH) have surged 38.1% year to date. Earnings are expected to surge 70.3% in 2019. It sports a Zacks Rank 1 (Strong Buy) and has a market cap of $2.2 billion.
  • First BanCorp. (FBP) carries a Zacks Rank #2. Its shares have risen 22.1% year to date. The company’s earnings are expected to grow 22% in 2019. It has a market cap of $2.3 billion.
  • Pinnacle Financial Partners, Inc. (PNFP) has a Zacks Rank #2 and its 2019 earnings are projected to increase 12.9%. PNFP has market cap of $4.7 billion and its shares have rallied 33.2% so far this year.

To be sure, Forbes.com also suggested banking and financial shares as part of its "27 Best Stocks to Buy for 2020."

While Forbes admits the whole sector tends to fare worse in the event of a downturn, “banks look really cheap, but they have more headwinds,” says Olivia Engel, CIO of active quantitative equity at State Street Global Advisors.

To which some investors say: Sail into the headwinds, Forbes explained. “The markets are discounting [banks] too much around the risk of a recession,” says Nathan Thooft, head of global asset allocation at Manulife Investment Management. “As long as the economy isn’t going into a recession and you have decent credit growth, banks will have benefits.”

Forbes also offered its own handful of picks:

  1. Bank of America (BAC)
  2. Citizens Financial Group (CFG)
  3. Charles Schwab (SCHW)
  4. PayPal (PYPL)
  5. Wells Fargo (WFC)

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Zacks Investment Research recently scoured the banking industry to determine the best such shares to buy now despite the lower interest rate environment.
zacks, bank, stocks, rates
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2019-24-03
Tuesday, 03 December 2019 09:24 AM
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