These are 2018’s top financial stocks.
The first year of the Trump administration was great for the financial sector, which, with a few weeks left in the year, had risen 19 percent in 2017 alone. Despite that steady rise, the rally looks poised to continue as the effects of a rising rate environment, deregulation and the possibility of tax cuts begin to meaningfully improve profitability. Those three factors, once in motion, can’t be stopped overnight. With these meaningful long-term tailwinds now in play, financials can continue to outperform other sectors. For investors thinking about boosting their exposure to the area, here are seven of the best bank stocks to buy for 2018.
Customers Bancorp Inc (NYSE: CUBI)
CUBI is a small-cap regional bank that looks like one of the most undervalued names in the entire market. By mid-2018 it will spin off its growing but unprofitable BankMobile division in a transaction expected to be worth about $3.57 per share, leaving shareholders the conservatively managed traditional banking business. CUBI suffered in 2017 after writing off a bad investment that damaged earnings per share, but with that impairment almost totally behind it, EPS is expected to rise 27 percent in 2018 — and it wouldn’t be shocking for CUBI to rise that amount, either. Just remember that its smaller size could make it slightly more unpredictable than bigger companies.
JPMorgan Chase & Co. (JPM)
JPMorgan shares have a lower risk-reward profile than CUBI, but it’s still one of the best bank stocks to buy for 2018, especially for more conservative investors. America’s most valuable bank pays a sustainable 2.1 percent dividend that helped it rank as one of 2018’s best dividend stocks as well. CEO Jamie Dimon is widely considered one of the best in the biz and is one of the few CEOs who remains at the helm after successfully navigating his company through the depths of the Great Recession. JPM’s staggering $19 billion stock buyback program slated to run through the end of June shouldn’t hurt shares either.
Synchrony Financial (SYF)
While JPMorgan shareholders reaped the major gains that characterized the financial sector’s impressive 2017, Synchrony Financial shares languished for much of the year — that is, before Warren Buffett began snapping up shares and Wall Street woke up to its own irrationality. Up 40 percent from its lows but only 3 percent on the year, the private-label credit card issuer trades at just 14 times earnings, should benefit from…