Investment Newsletters - Top 5 Financial Stocks With An Overall Buy Rating
Financial services sector was one the worst performing industries last year
, losing about 18.4% in market value according to some investment newsletters. The first quarter of 2012 (Jan-Mar), observed a strong bullish trend in the sector with an average double figure gains in most stocks. However, in the last two months (i.e. April and May), the sector pretty much lost all the gains it had made earlier in the year. Probably due to the intensifying Europes sovereign dept crisis, change of governments in few euro zone countries, while inability to form the same in others and several other reasons signaling economic slowdown on either side of the Atlantic. In light of these facts, investing in financial stocks could be a risky proposition over a short-term view. Nevertheless buying these stock at such low prices can be immensely rewarding as well. Regardless of what may happen in near future, this is definitely a high growth sector in long-term. This article underlines five such stocks with an overall buy rating.
Bank of America Corporation (BAC)is a bank holding company, and a financial holding company. It is one of the largest financial institutions in the world, with lending operation in small business, consumer, and corporate arenas as well as asset management and investment banking division. Until last year, the Bank had reported billions of dollars in losses for several years in a row.In 2011, the Bank reported a net income of US$85 million, perhaps indicating bad times may be over for this stock. The company reported US$653 million in net income in the first quarter and though it faces a lot of challenges, investors expect it to post a decent net income in the year 2012. From technical analysis viewpoint, its shares are trading around the multi-year low, which makes it even more attractive.
Citigroup Inc. (C)is a globally diversified financial services holding company that provides a broad range of financial products and services to consumers, corporations, governments and institution, doing business in more than 160 countries. Citigroups shares, down 44% in 2011, recouped some of its lost value earlier this year only to go back to where it started the year. The companys net income for 2011 was below analysts consensus views, but having said that, it is expected to earn US$9 per share in 2012 from current value of about US$25/share. The banks extensive presence in developing countries gives it the opportunity to outdo U.S. banks.
Morgan Stanley (MS) isa financial holding company that provides various financial products and services to corporations, governments, financial institutions, and individuals, also wealth management and asset management services. After losing almost half of its share price last year, the stock saw some buying early in 2012. But much like most of the financial sector, collapsed back losing all 2012-gains. Analysts expect a bounce back with a target of US$21 by the end of the year. Also, technically, the price is hovering around the multi-year low region of US$10; which was made during the Great Recession of 2008. Thereby, making it an attractive purchase at the moment.
Barclays (BCS)is one of the largest banks in the world. This U.K. bases bank has retail and business customer operations in Europe, Africa and Asia, runs a debt-focused investment bank, and it owns Barclaycard, a large credit card issuer.Down 32% last year, the bank beat the forecasts with 22% rise in the first-quarter profit in 2012. Trading at around US$10.75/share analysts expect it to earn handsome returns by theyear-end.
Goldman Sachs Group, Inc. (GS)Goldman Sachs is a global investment-banking juggernaut. Its operations include investment banking, institutional client services, lending, securities and investment management to corporations, financial institutions, governments and high-net-worth individuals worldwide. It has a $47 billion market value (current). Though Goldman Sachs profits fall by 23% in the first quarter of 2012, but the bank beat expectations. The quarter was overshadowed by the resignation of former Goldman executive director Greg Smith. Analysts expect it to earn $12 - $13 per share by the end of year and that will grow by 6% in 2013.
To conclude, the above-mentioned are the top five financial stocks with overall buy rating from
investment newsletters. It may be noticed that all five are large cap stocks with extensive presences world over, as choosing mid-cap or small-cap stocks in turbulent times can be very risky. These stocks,though have great risk exposure, but are likely to be bailed out first in case of any negative outcome from Europes financial crisis. Therefore,making them a safe bet over the long-term. On the other hand, if the Euro zone crisis is averted and the financial sector bounces back, these stocks will mark substantial gains considering their cheap valuation now.
by: Gerald Rickman
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