3 bank stocks to buy if you’re worried about inflation
As inflation heads north, investors are looking for opportunities in sectors that can help them navigate tough economic waters. And since banks generally do well under inflationary conditions, we think it might be wise to add grade Wells Fargo (WFC), US Bancorp (USB), and KeyCorp (KEY) bank stocks to their bank now. wallet. Read on.
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Major stock indexes retreated last week as consumer price data showed higher than expected inflation. The consumer price index rose 6.2% in October compared to the previous year, its biggest jump in over 30 years. Inflation has soared due to growing demand fueled by liquidity, a buying spree driven by the economic recovery and constraints on the supply side.
Strong inflationary trends usually mean that the value of bonds and cash is struggling to keep pace with rising inflation. According to personal finance expert Suze Orman, “Only stocks have a reputation for earning more than inflation. Banks, in particular, tend to benefit when the Fed tightens monetary policy because of their asset sensitive nature. When interest rates rise, bank assets like bonds and loans tend to rise higher than their liabilities, such as various deposits. And investor interest in bank stocks is evident in the First Trust Nasdaq Bank ETF (FTXO) Gains of 3.2% over the past month.
So, to help keep your portfolio inflation-proof, we think it might make sense to grab some quality Wells Fargo & Company bank stocks (WFC), US Bancorp (Usb) and KeyCorp (KEY). They are expected to gain significantly as the Fed tightens monetary policy.
Wells Fargo & Company (WFC)
WFC is a financial services company that offers a diverse set of banking, consumer and commercial finance, investment and mortgage products and services. The San Francisco-based bank operates through four segments: consumer loans; the Commercial Bank; business and investment banking; and asset and investment management.
On November 8, 2021, WFC announced that it is offering Black Knight’s digital service solution to its mortgage clients. Servicing Digital’s web and mobile solution provides detailed, timely and highly personalized information about WFC consumers and their mortgages and loans. Joe Nackashi, President of Black Knight, said, “We are excited to further expand our relationship with Wells Fargo and provide solutions that can deliver tremendous value to our customers.
For its fiscal third quarter, ended September 30, 2021, WFC’s net profit increased 59.2% year-over-year to $ 5.12 billion. His EPS rose 67.1% year-on-year to $ 1.17. In addition, its average deposits increased 4% year-on-year to $ 1.45 trillion.
Analysts expect WFC’s FY2021 EPS and revenue to increase 1,036.6% and 5.2% year-over-year, respectively, to $ 4.66 and 76.12 $. It has beaten Street’s EPS estimates in each of the past four quarters. Over the past year, the stock gained 114% of its price to close Friday’s trading session at $ 50.96.
the WFC POWR odds reflect strong prospects. The company has an overall rating of B, which translates into a purchase in our proprietary rating system. POWR ratings assess stocks based on 118 distinct factors, each with its own weight.
It has a B grade for growth and value. In dimension B Money center banks industry, it is ranked # 1 out of 10 stocks. Click here to check out WFC’s additional ratings for momentum, stability, feeling and quality.
US Bancorp (Usb)
The USB financial services holding company in Minneapolis, Minnesota, provides various financial services. It operates in corporate and commercial banking; Banking services for individuals and businesses; Wealth management and investment services; Payment services; and the Treasury and Business Support segments.
On September 21, 2021, USB reached a definitive agreement to acquire the core regional banking franchise of MUFG Union Bank for approximately $ 8 billion. The deal is expected to add more than one million personal customers and 190,000 small businesses to the company’s portfolio.
USB net profit increased 28.3% year-on-year to $ 2 billion for its fiscal third quarter, ended September 30, 2021. The company’s average total deposits increased 6.4% in year on year to reach $ 26 billion. In addition, its EPS increased 31.3% year-on-year to $ 1.30.
For its 2021 fiscal year, USB EPS is expected to increase 68.3% year-on-year to $ 5.15. Its revenue for its 2022 fiscal year is expected to grow 10.6 percent year-on-year to $ 25.3 billion. It has beaten consensus EPS estimates in three of the past four quarters. The stock has gained 41.3% over the past year to close Friday’s trading session at $ 60.50.
USB’s strong fundamentals are reflected in its POWR ratings. The stock has an overall rating of B, which translates into a purchase in our proprietary rating system.
It has a B rating for stability and feeling. It is ranked # 2 in the Banking industry. To check the additional USB ratings (Growth, Value, Momentum and Quality), Click here.
KEY is the holding company of the KeyBank National Association which provides a variety of retail and commercial banking products and services in the United States. The Concern based in Cleveland, Ohio operates in two segments: consumer banking and commercial banking. In addition, it offers several deposits, investment products and services.
For its fiscal third quarter, ended September 30, 2021, KEY’s revenue increased 8% year-on-year to $ 1.82 billion. Its tax-equivalent net interest income increased 1.9% year-on-year to $ 1 billion. In addition, its average deposits increased 9% year-on-year to $ 147 billion. And its EPS rose 58.5% year-on-year to $ 0.65.
Analysts expect KEY’s EPS and revenue for its 2021 fiscal year to grow 100% and 6.3% year-on-year, respectively, to $ 2.54 billion and $ 7.14 billion. It has beaten Street’s EPS estimates for each of the past four quarters. Over the past year, the stock gained 66.3% of its year-over-year price to close Friday’s trading session at $ 24.09.
KEY’s POWR ratings reflect promising prospects. The company has an overall rating of B, which translates into a purchase in our proprietary rating system.
It has a B rating for value. It is ranked # 3 in the Money Center Banks industry. Click here to see additional POWR ratings for KEY (Growth, Momentum, Stability, Feeling and Quality).
WFC shares rose $ 0.11 (+ 0.22%) in pre-market trading on Monday. Year-to-date, WFC has gained 71.39%, compared to a 26.66% increase in the benchmark S&P 500 over the same period.
About the Author: Dipanjan Banchur
Since he was in elementary school, Dipanjan had been interested in the scholarship. This led him to obtain a master’s degree in finance and accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a keen interest in reading and analyzing emerging trends in financial markets.
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