Category Archives: Value Stocks

Best Financial Stocks To Buy Right Now: C

Citigroup Inc. (C), America’s fourth-largest asset bank, said that with President Donald Trump’s cut in corporate tax rates, tax revenues fell, and stock trading income rebounded with market volatility, profit in the first quarter climbed 13%. It is sluggish in 2017.

The bank said in a statement on April 13th that net income increased to US$4.62 billion from US$4.09 billion in the same period last year. Adjusted earnings per share climbed to $1.68, surpassing the average analyst estimate of $1.61 in a survey conducted by database provider FactSet.

Citigroup Profit Climbs 13% as Stock-Trading Revenue Jumps

Like Wall Street rival JPM, Citigroup benefited from Trump’s tax cuts as its corporate tax rate fell from 31% to 24%. According to the Responsive Political Center, Citi has lobbied for the new bill.

As traders speculated that the Fed’s interest rate hikes, the trade tensions between the US and China, and the data privacy scandal of Facebook Inc. (FB), the bank also benefited from the recovery of the stock market volatility. The key indicator of the market volatility of the Cboe Volatility Index VIX The average increase of 43% in the quarter.

The volatility rekindled investors’ weakness last year, as the unusually quiet market kept investors on the sidelines and Wall Street Bank’s traders did not have the opportunity to make gains from sharp fluctuations.

Citigroup’s stock trading revenue increased by 38% to US$1.1 billion, while fixed-income trading revenue decreased by 7% to US$3.42 billion.

Earlier Friday, JP Morgan Chase, the largest bank in the United States, said that its first-quarter profit rose by 35%, thanks to tax cuts and improved trade performance.

Citigroup’s other Wall Street rivals – Bank of America (BAC), Goldman Sachs Group (GS) and Morgan Stanley (MS) – will announce their results next week.

Best Bank Stocks To Buy For 2018

Now we have not reminded investors to pay close attention to banking stocks, because the market has been turbulent recently and the performance of banking stocks has been surprising.

The Standard & Poor’s 500 Index (.SPX) February 8 low – Technical Selector SPDR ETF (XLK) has returned to 12.6%, including reinvestment of dividends, and has since eased above the 6.9% rise of the S&P 500 Index. Bank shares are often considered the opposite of technology – financial stocks are the largest sector in the Russell 1000 Value Index (.RUI), and technology stocks are the largest of the Russell 100 growth index. However, they also rebounded sharply: SPDR Standard & Poor’s Regional Bank ETF (KRE) rose 8.8%, while SPDR Standard & Poor’s Bank ETF (KBE) rose 7.7%. Both of the last two trading days have hit a new 52-week high, which is something that has not yet been implemented in many of the broader areas after the correction last month.

If banks have more highs, don’t be surprised. On Wednesday, it is generally expected that the Fed will raise interest rates to a meeting that is expected to reduce the supervision of the group, but the environment still seems to be suitable for bank rebound.

Last week, the Senate approved a bill that will increase the “global system importance” of relevant banks from $50 billion to $250 billion. If the House of Representatives passes this bill, then banks with $50 billion to $100 billion in assets – including SVB Financial Group (SIVB) and Zions Bancorp (ZION) – will be immediately liberated from the Dodd-Frank legislation and have 100 billion Dollar assets of at least less than $250 billion – including State Street (STT) and American Express (AXP) – will be exempted 18 months after the bill is passed.

The bill is particularly beneficial to banks that have not yet reached the threshold of $50 billion because they have not spent the extra amount of compliance explaining KBW analysts Brian Gardner and Michael Michaud. Financial institutions below this threshold include the CIT Group (CIT) with $49.3 billion in assets, the $41.9 billion in New York Community Bank (NYCB) and the $44.4 billion in People’s United Finance (PBCT).

Gardner and Michaud believe that this may also lead to more bank mergers, because institutions no longer need to worry about excessive consequences. “Everyone tells us that we think this possibility usually supports the [small-cap] bank valuation. All other conditions are equal,” they explained.

Of course, the others are different. The next week, the Fed is generally expected to raise the benchmark interest rate by a quarter of a percentage point. For banks, higher interest rates are often considered good news, but they also have unfortunate side effects: They force banks to pay more for their interest-bearing accounts or risk losing customers.

Ken Usdin, an analyst at Jefferies, pointed out that although the overall interest rate rose by only 0.02 percentage points, the online banking interest rates of CIT, Discover Financial Services (DFS) and Synchrony Financial (SYF) were raised by 0.18 percentage points. “While all banks may take several months to initiate retail price increases, we expect more willingness to increase rates after the next one,” he explained.

Rising deposit rates may erode bank profits. Regardless of the interest rate, investors have been gambler’s bank. But KBW analyst Christopher McGrady pointed out that banks can offset the pressure on margins if their assets are quickly readjusted as interest rates rise. For example, banks with short-term and floating-rate loans benefit more from higher interest rates, while banks with long-term and fixed loans may lag behind competitors.

Some banks benefit from both sides. McGratty said that as interest rates rise, SVB Financial’s interest rate on deposits is slow, but it tends to provide variable-rate loans. In search of others, McGratty screened small and medium-sized banks that tested loan yields – measures of bank assets’ responsiveness to high interest rates – at least 30% of the loans were for companies, which are often short-term and made at floating rates.

First Horizo ​​National (FHN), SVB Financial, United Community Banks (UCBI), First Merchants (FRME), Butterfield Bank (NTB), Western Alliance Bancorp (WAL) and Sterling Bancorp (STL) were highly rated by KBW analysts .

Buying a Standard & Poor’s Regional Bank ETF may be easier, but if you are looking for individual stocks, this is not a good start.