Given that all banks have passed their stress tests, should financial stocks be in focus now?
Do You Have These Top Financial Stocks On Your Radar Right Now?
Whether you find it exciting or not, financial stocks remain one of the most fundamentally sound investments in the stock market. After all, finance is an important part of our daily lives. We utilize the industry on a daily basis without realizing it at times. For example, we make purchases on credit or debit cards, pay bills electronically, or even apply for mortgages and loans. The financial sector includes a wide range of companies that may involve retail and commercial banking, accounting, insurance, asset management, credit cards, and brokerage.
As some of you may be aware, digital payment companies have been on the rise over the past few years. This goes in line with the tech boom that we have been witnessing. We have companies such as Paypal Holdings (NASDAQ: PYPL) and Square (NYSE: SQ) trading near their all-time highs. Not to be left out, traditional banks are also digitizing their systems. If you believe the financial sector would continue to thrive, do you have a list of top financial stocks to watch in the stock market today?
Top Financial Stocks To Watch Right Now
- Morgan Stanley (NYSE: MS)
- Goldman Sachs Group Inc (NYSE: GS)
- JPMorgan Chase & Co (NYSE: JPM)
- Citigroup Inc (NYSE: C)
First up, we have the financial holding company, Morgan Stanley. The company’s segments include Institutional Securities, Wealth Management, and Investment Management. MS stock has been performing exceptionally well since the market crashed back in March 2020. If you have noticed, it has risen more than 80% over the past year.
Just last week, Morgan Stanley announced the launching of Morgan Stanley Next Level Fund, L.P. The fund would invest primarily in early-stage tech companies and tech-enabled companies with women or diverse members as part of the founding team. The company will be partnering with Hearst, Microsoft Corporation (NASDAQ: MSFT), and Walmart (NYSE: WMT) on this exciting new initiative. This initiative hopes to seek out high-growth companies which are founded by multicultural and women entrepreneurs.
During its first quarter, Morgan Stanley raked in revenues of $16.1 billion, an increase of 35% year-over-year. Also, it posted a net income of $3.98 billion, up by a staggering 150% year-over-year. Given these impressive quarterly earnings, the company appears to be firing on all cylinders. Furthermore, the company has recently announced that it will double its quarterly common stock dividend to $0.70 per share from the current $0.35 per share. Considering that, would MS stock be a top financial stock to watch?
Goldman Sachs Group Inc
Next, we have the investment bank Goldman Sachs. Essentially, the company provides a range of financial services to corporations, financial institutions, governments, and individuals. The Company operates in four business segments: Investment Banking, Institutional Client Services, Investing & Lending, and Investment Management. GS stock has increased by over 90% over the past year.
Today, it appears that Lloyd’s Register (LR) has agreed to sell its business assurance and cybersecurity division to Goldman Sachs Asset Management. According to LR, the deal is expected to be completed during the second half of 2021 subject to regulatory approval. Michael Bruun, the EMEA head of private equity business within Goldman Sachs Asset Management, said in a statement on this investment that it looked “forward to accelerating the company’s growth trajectory both organically and through acquisitions”.
Furthermore, Goldman Sachs also plans to increase its common stock dividend to $2.00 per share. This comes after the company’s stress test resulted in a stress capital buffer of 6.4%. It also shows the confidence of the company in increasing the durability of its franchise revenues. This is in line with its capital management framework of prioritizing investment in its client franchise while returning excess capital to its shareholders. With that in mind, would you consider investing in GS stock?
JPMorgan Chase & Co
JPMorgan Chase is a financial holding company. The company engages in investment banking, financial services. As it stands, the company is one of the “big four banks” in the U.S. After all, it is the largest bank by market capitalization. The bank’s recent success is primarily driven by its credit card and auto loan businesses. Just like the other two banks mentioned earlier, JPM stock has also been steadily rising since the crash back in March 2020. It has climbed by over 65% over the past year.
On Monday, the company along with C6 Bank announced a strategic agreement. JPMorgan will take a 40% ownership stake in the full-service Brazilian digital bank, subject to regulatory approvals. C6 Bank was launched in 2019, since then, it has amassed more than 7 million customers on its digital platform. It offers a full suite of products including multi-currency checking and savings accounts, debit and credit cards, investment, and many more.
This is an exciting partnership as C6 is one of Brazil’s fastest-growing digital banks. JPMorgan believes that C6 is well-positioned to sustain its growth trajectory and build a strong franchise. Who knows, it may have the potential to dominate the Brazilian banking market in the long term. With all said and done, only time will tell if this partnership would be a success. All things considered, is JPM stock worth your attention now?
Last on the list, we have another “big four bank” in the U.S., Citigroup. In essence, it is a diversified financial services holding company that provides various financial products and services. The company operates in two segments, Global Consumer Banking (GCB) and Institutional Clients Group (ICG). The company stock has been trading sideways since the start of the year. That said, it has still risen by over 18% year-to-date.
Earlier this month, the company launched a different kind of no annual fee cashback credit card: Citi Custom Cash. What makes it special is that it adapts to cardmember’s spending needs, rewarding them with 5% cashback on their top eligible spend category, and 1% cashback on all other purchases. Furthermore, earning cash with a card is easier than ever. The card automatically adjusts to where the customer’s spending is trending.
For the fiscal first quarter of 2021, the company reported revenue of $19.3 billion topped the $18.8 billion estimate. Meanwhile, its net income came in at $7.9 billion which represents an increase of a whopping 216%. This is likely driven by the lower cost of credit and a strong performance in its Institutional Clients Group. Given that Citi will be announcing its second-quarter earnings report on July 14, investors will be keeping a close eye on whether the company could keep up its impressive financials. Hence, would you buy C stock ahead of its earnings report?
Originally Posted on June 29, 2021 – 4 Financial Stocks To Watch In July 2021
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