This article looks at the 10 best American bank stocks to buy now. We will also draw attention to how the industry performed last year and discuss the outlook for 2025.
2024 was a memorable year for America’s banking giants. According to a recent report in the Financial Times, the seven largest banks in the country represented 56% of the industry’s profits during the first nine months of the year, up from 48% during the same period in 2023.
READ ALSO: 10 High Growth Financial Stocks To Invest In and 10 Best Bank Penny Stocks to Buy According to Hedge Funds.
The banking sector is also experiencing improved capitalization. In November, the Federal Reserve Board found that 99% of the country’s banks reported capital above regulatory requirements. Moreover, the Federal Deposit Insurance Corporation (FDIC) noted a 3.5% increase in equity capital in Q3 2024, reflecting the upward trend in capitalization.
Globally, credit rating agency Moody’s upgraded the overall outlook for the industry from negative to stable in December for the first time since 2023, citing interest rate cuts and monetary adjustments being made by the G-20 countries. The Federal Reserve announced three cuts last year, lowering the central bank’s target interest rate to 4.25% and 4.5%.
Trump’s return to the White House has also raised optimism about lax regulations in the financial sector, which analysts believe can spur dealmaking activity in the banking sector. Reduced oversight and a business-friendly environment are also likely to boost revenue and loan growth, and subsequently improve banks’ bottom line.
The U.S. president has also repeatedly demanded further reductions to the interest rate. Here is what he said at the World Economic Forum in Davos on January 23.
With oil prices going down, I’ll demand that interest rates drop immediately, and likewise they should be dropping all over the world.
While the general outlook for the banking industry looks promising for 2025, analysts also warn of the potential risks associated with ongoing geopolitical conflicts, which can have adverse effects on the global economy. Increasing trade tensions and protectionist policies can also hurt investment inflows.
On January 31, the White House announced that President Trump would move ahead with his planned tariffs on Canada, China, and Mexico, starting February 1. The 78-year-old has also threatened to impose tariffs on the EU, citing the bloc’s treatment of the U.S.
“Am I going to impose tariffs on the European Union? You want the truthful answer or shall I give you a political answer? Absolutely. The European Union has treated us so terribly.”
With that said, let’s now head over to the list of the best American bank stocks to buy now.
A group of business people discussing plans around a boardroom table adorned with a financial services company logo.
Methodology
For this article, we sampled stocks from ETFs with exposure to American banking companies and our previous articles on the sector. From there, we selected the 10 stocks with the highest number of hedge fund investors, based on Insider Monkey’s database of over 900 prominent hedge funds as of Q3 2024. The 10 best American bank stocks to buy now have been ranked in ascending order based on the number of hedge funds holding stakes in them. Where two or more stocks were tied on hedge fund sentiment, we used a higher market cap as a tiebreaker between them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best American Bank Stocks To Buy Now
10. The PNC Financial Services Group, Inc. (NYSE:PNC)
Number of Hedge Fund Holders: 51
The PNC Financial Services Group, Inc. (NYSE:PNC) is a diversified financial services company, which owns the PNC Bank, one of the largest banks in the United States with over 2,200 branches nationwide.
The company recently announced to invest another $500 million to open 100 new branches and renovate another 200 locations. This is an extension to the plan laid out in February last year to spend $1 billion in opening 100 new locations and renovating 1,200 others through 2028. The robust investment plan is being viewed by analysts as a significant step forward for The PNC Financial Services Group, Inc. (NYSE:PNC) as it strives to offer its clients convenient, in-person access to financial experts.
Improving customer experience remains a top priority for the company. In September 2024, it entered into a bilateral data access agreement with Plaid to enhance data security for its clients. The agreement will enable PNC customers to safely and securely share their financial data with selected financial applications via Plaid.
On January 16, The PNC Financial Services Group, Inc. (NYSE:PNC) announced strong financial results for the fourth quarter of fiscal 2024. It posted a net income of $1.6 billion, or $3.77 per share, comfortably beating estimates of $3.26 per share. Revenue for the quarter stood at $5.6 billion, up 2% sequentially, and topping expectations of $5.48 billion.
Wall Street analysts are bullish on PNC with a consensus Buy rating. It is one of the best American bank stocks to buy now, with 51 hedge funds having a stake in the company, according to Insider Monkey’s database for Q3 2024.
9. Morgan Stanley (NYSE:MS)
Number of Hedge Fund Holders: 55
Morgan Stanley (NYSE:MS) is a global financial services company, headquartered in New York, that provides a range of investment banking, securities, wealth management, and investment management services to corporations, financial institutions, governments, and individuals.
While talking to CNBC at the World Economic Forum on January 23 about his opinion on digital currencies, CEO Ted Pick stated that Morgan Stanley (NYSE:MS) would work with U.S. regulators on figuring out whether the bank can deepen its footing in the cryptocurrency market. Here are some of his comments:
“For us, the equation is really around whether we, as a highly regulated financial institution, can act as transactors. We’ll be working with the Treasury and the other regulators to figure out how we can offer that in a safe way.”
This followed the SEC’s announcement of a task force earlier in the week to develop a regulatory framework for crypto assets. Morgan Stanley (NYSE:MS) has consistently been ahead of its peers when it comes to digital currencies. In 2021, it became the first major bank in the United States to offer Bitcoin funds to its wealthy clients. Last year, it also took the lead in offering Bitcoin ETFs.
Morgan Stanley (NYSE:MS)’s financial performance remains robust. It topped estimates for revenue and earnings during the fourth quarter of fiscal 2024, driven by the firm’s equities and fixed-income traders delivering better-than-expected results. The company’s net income more than doubled from last year to $3.7 billion, translating to a diluted EPS of $2.22.
Morgan Stanley (NYSE:MS) is one of the best American stocks to buy now, with Wall Street analysts having a consensus Buy rating for the stock. According to Insider Monkey’s database for Q3 2024, 55 hedge funds held a stake in the company.