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.
8. Ally Financial Inc. (NYSE:ALLY)
Number of Hedge Fund Holders: 56
Ally Financial Inc. (NYSE:ALLY) is an American financial services company, offering a wide range of products such as auto financing, banking, and insurance. It owns the Ally Bank, a digital-only bank, that caters to the banking requirements of individuals and businesses. While the bank does not have any physical branches, it boasts a large network of ATMs.
On January 22, Ally Financial Inc. (NYSE:ALLY) declared results for the fourth quarter and full year 2024. Total net revenue for the year was reported at $8.2 billion, with a pre-tax income of $836 million and a net income of $668 million. It delivered an adjusted EPS of $2.35, while the return on common equity stood at 4.8%.
During 2024, it received 14.6 million consumer auto applications, which resulted in consumer originations of $39 billion, showcasing the strength of Ally Financial Inc. (NYSE:ALLY)’s dealer relationships and the scale of its business. Ally Bank had retail deposits of $143.4 billion for the year, with 92% being FDIC-insured. The bank added 230,000 new customers in 2024, taking its total number of depositors to 3.3 million.
Ally Financial Inc. (NYSE:ALLY) also announced that it had reached an agreement with CardWorks, Inc. and its bank subsidiary, Merrick Bank, on the sale of Ally’s credit card business. The decision is part of the company’s overall strategy to prioritize its core business, streamline its structure, and drive improved returns.
Ally’s share price has risen 2% since the earnings call and business update. Wall Street analysts are bullish on the stock, with a consensus Buy rating, and anticipate a further 8% uptick, on average, in its share price. Investor sentiment is improving as well. According to Insider Monkey’s database for Q3 2024, 56 hedge funds had investments in Ally Financial Inc. (NYSE:ALLY), up from 45 at the end of the second quarter. It is one of the best American bank stocks to buy now.
7. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 62
American Express Company (NYSE:AXP) is a bank-holding and financial services company that specializes in payment cards. The stock had impressive returns in 2024, with its share price appreciating 60% during the year.
On January 24, the company announced financial results for the fourth quarter and full-year 2024. It delivered record revenues of $66 billion for the year, up 10% year-over-year, and a record net income of $10.1 billion, translating to an EPS of $14.01, growing 25% from last year.
American Express Company (NYSE:AXP) also saw a record 13 million new card acquisitions in 2024. Moreover, it continued to add millions of new merchant locations to its global network. The company exited the year with strong momentum during the fourth quarter, with an 8% growth in billings, spurred by robust holiday spend.
The pickup in spending on AmEx cards was driven by millennials and Gen Z users, who spent more on entertainment and travel during the holiday season. Their transaction volumes jumped 16% during the quarter, up from 12% in the third quarter. Elevated spending trends have continued in January 2025. Analysts believe accelerated billings growth will be critical in American Express Company (NYSE:AXP)’s quest to achieve revenue growth of between 8% and 10% in fiscal 2025.
According to Insider Monkey’s database for Q3 2024, 62 hedge funds held a stake in the company, making American Express Company (NYSE:AXP) one of the best American bank stocks to buy now.
6. Capital One Financial Corporation (NYSE:COF)
Number of Hedge Fund Holders: 67
Capital One Financial Corporation (NYSE:COF) is an American bank holding company that owns the Capital One Bank. It provides a range of financial products and services to customers, businesses, and other clients through its digital channels, branch locations, and cafes.
On December 19, COF announced that it had received approval from the Delaware State Bank Commissioner to complete its acquisition of Discover Financial Services and its subsidiary, Discover Bank. The two companies had entered into a definitive agreement in February 2024 for the acquisition of Discover for $35.3 billion. The transaction is expected to close in early 2025.
The move has bolstered investor confidence in Capital One Financial Corporation (NYSE:COF). Amalthea Fund stated the following regarding the acquisition in its Q3 2024 investor letter:
“US Credit cards have become a concentrated business. The leading players in order are Chase, a part of JPMorgan, American Express, Citi, Capital One, Bank of America, and Discover. A combination of Capital One and Discover will become the number two player.”
Capital One Financial Corporation (NYSE:COF)’s solid financial performance is another factor driving the bullish sentiment. During Q4 2024, the company reported a total net revenue of $10.2 billion. Net income for the quarter stood at $1.1 billion, or $2.67 per diluted common share, up from $706 million, or $1.67 per diluted common share during the same period last year.
Wall Street analysts have a consensus Buy rating for COF. Investor sentiment is steadily improving. According to Insider Monkey’s database for Q3 2024, 67 hedge funds held a stake in the company, up from 65 at the end of Q2. Capital One is among the best American stocks to buy now.
5. The Goldman Sachs Group, Inc. (NYSE:GS)
Number of Hedge Fund Holders: 72
The Goldman Sachs Group, Inc. (NYSE:GS) is an American investment banking and financial services firm, offering a range of financial services to a diversified pool of clients. It operates through the Global Banking & Markets, Asset & Wealth Management, and Platform Solutions segments.
On January 13, the company announced the formation of the Capital Solutions Group to expand its private credit business. The unit is being established by combining solution activities within the company’s Global Banking & Markets segment. It will include the provision of investment banking services to private equity firms, finding investors who could offer capital for deals, and making loans tied to collateral to other lenders.
The move is among the string of measures Goldman Sachs has undertaken in recent years to combine its investment banking franchise with leading market businesses to offer comprehensive strengths to its customers. The creation of the Capital Solutions Group will provide clients access to differentiated investment and sourcing opportunities in private credit, which is one of the hottest areas on Wall Street currently.
On January 15, The Goldman Sachs Group, Inc. (NYSE:GS) announced financial results for the fourth quarter of fiscal 2024, topping estimates on both revenue and earnings. The bank’s profits have roughly doubled year-over-year, driven by a surge in higher equities and fixed-income trading revenue, robust investment banking results, and shrinking expenses.
The company’s share price has spiked 13% since the declaration of Q4 2024 results which reflected the bank’s strength in serving clients despite a challenging macroeconomic environment. Wall Street analysts are bullish on The Goldman Sachs Group, Inc. (NYSE:GS) with a consensus Buy rating. It is one of the best American stocks to buy now, with 72 hedge funds having a stake in the company.
4. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 72
Wells Fargo & Company (NYSE:WFC) is a financial services company that owns the Wells Fargo Bank, which is considered among the ‘Big Four’ banks in the United States. It also boasts a significant global presence, serving 68 million customers worldwide. The bank’s extensive network of branches and ATMs provides it a substantial edge over its smaller competitors.
WFC has been actively expanding its offerings. In January, the company partnered with Derivative Path to deliver a new foreign exchange payment solution, featuring over 120 currency swap options and tools, for regional banks in the US. Last year in September, Wells Fargo & Company (NYSE:WFC) announced a multi-year agreement with the Volkswagen Group of America, under which the former would become the preferred vehicle purchase financing provider for the Audi, Ducati, and Volkswagen brands in the country. The partnership is expected to commence in April 2025.
The company’s share price surged by 46.5% in the calendar year, 2024, driven by its robust financial performance. In its Q4 2024 investor letter, Oakmark Fund highlighted that Wells Fargo & Company (NYSE:WFC)’s share price continued its upward trajectory following Donald’s Trump victory in the November presidential elections, as investors pin hopes on relaxed regulations under the new administration to stimulate dealmaking activities. The fund is confident that the bank’s superior business mix and return potential will unlock further value ahead.
On January 15, Wells Fargo & Company (NYSE:WFC) posted better-than-expected earnings for the fourth quarter of fiscal 2024, with net income growing 47% from last year to reach $5.1 billion, translating to an EPS of $1.43 per share. The company also issued strong guidance on net interest income for fiscal 2025, which has resulted in a bullish sentiment around the stock.
According to Insider Monkey’s database for Q3 2024, 72 hedge funds held a stake in WFC, making it one of the best American stocks to buy now.
3. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 88
Citigroup Inc. (NYSE:C) is an American multinational investment banking and financial services company with a presence in over 90 countries. It is also the third-largest banking institution in the United States by assets.
During its recent Q4 2024 earnings call on January 15, the company announced that it had swung to a fourth-quarter profit of $2.9 billion, compared to a net loss of $1.8 billion during the same period last year. Citigroup Inc. (NYSE:C)’s financial results were hurt last year by charges it booked toward the end of 2023 as part of its business restructuring efforts.
The company’s revenue also surged 12% year-over-year to reach $19.6 billion, driven by growth in each of its businesses and some impact from the currency devaluation in Argentina. For the full year, Citigroup Inc. (NYSE:C) generated revenues of $81.1 billion and a net income of $12.7 billion – both significantly improving from 2023.
Citi is seeing tremendous growth in the Middle East and Africa region on the back of strong FDI inflows. In November, the bank received approval from Saudi Arabia to establish its regional headquarters in Riyadh, which marks a significant step for the company in its bid to further solidify its position in the region.
Citigroup Inc. (NYSE:C) is also undergoing strategic repositioning. In December, it separated its institutional banking business from its consumer, small, and middle market entities in Mexico. This is an important milestone for the bank as it looks to simplify the firm and enhance focus on its core offerings.
According to Insider Monkey’s database for Q3 2024, 88 hedge funds held a stake in Citigroup Inc. (NYSE:C), making it one of the best American stocks to buy now. Wall Street analysts are also bullish on the stock, with a consensus Buy rating and an average share price upside potential of 3%.
2. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 98
Bank of America Corporation (NYSE:BAC) is one of the world’s leading financial institutions. The bank’s extensive network of branches and robust digital presence have allowed it to attract customers, expand its deposit base, and effectively manage costs to maintain profitability.
BAC enjoys a healthy mix of contributions from its segments toward its overall success, with over half of its earnings coming from the people-focused Consumer Banking and Global Wealth & Investment Management (GWIM) businesses, whereas the other half is contributed by the Global Banking and Markets businesses, which are dedicated toward serving corporations and institutional investors.
On January 16, the company announced financial results for the fourth quarter of fiscal 2024. It reported a revenue of $25.3 billion, up 15% year-over-year. Net income for the quarter was posted at $6.7 billion, or 82 cents per diluted share, compared to $3.1 billion during the same period last year. Moreover, Bank of America Corporation (NYSE:BAC) also added 213,000 net new consumer checking accounts in Q4, marking a six-year streak of quarterly growth.
The company also maintained its commitment to shareholders, returning $3.5 billion in share repurchases and $2 billion in dividends during Q4. BAC has a strong dividend-paying history, spanning over 27 years, which makes it a reliable option for income investors.
According to Insider Monkey’s database for Q3 2024, 98 hedge funds held a stake in the company, making Bank of America Corporation (NYSE:BAC) one of the best American stocks to buy now.
1. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 105
JPMorgan Chase & Co. (NYSE:JPM) is an American financial services company that provides a range of investment banking and asset management solutions for a diverse client base. For the past four years, it has been the largest bank in the U.S. for retail deposits.
During its recent Q4 2024 earnings call on January 15, the company reported robust results, topping estimates for both revenue and earnings. The strong show was attributed to better-than-expected net interest income and strong investment banking results. JPMorgan Chase & Co. (NYSE:JPM)’s profits increased by 50% year-over-year to reach $14 billion.
The company also posted a record annual profit of $58.5 billion for 2024, which analysts have credited to an improving economy and a revival in deal-making activities in the sector as interest rates drop.
Looking ahead, JPMorgan Chase & Co. (NYSE:JPM) anticipates a boost in net interest income, with its projections for 2025 surpassing analysts’ forecasts. Mary Erdoes, the chief executive officer of JPM’s Asset & Wealth Management business, while speaking at the World Economic Forum recently expressed hope that Trump’s lighter-touch regulatory regime would further spur dealmaking in the American economy.
JPMorgan Chase & Co. (NYSE:JPM) is a generous dividend payer and distributed a common dividend of $3.5 billion or $1.25 per share during the recently concluded quarter. Given its solid financial position, analysts expect the company to continue sustaining strong shareholder returns. As a result, they have a consensus Buy rating for the stock. According to Insider Monkey’s database for Q3 2024, 105 hedge funds held a stake in the company, making it the best American stock to buy now.
Overall, JPM ranks first among the 10 Best American Bank Stocks To Buy Now. While we acknowledge the potential of banking companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than JPM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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