1. Royal Bank of Canada (NYSE:RY)
Upside Potential as of January 9: 28.63%
The Royal Bank of Canada (NYSE:RY) is one of the six banks that hold roughly 90% of all bank deposits in Canada and is one of the two biggest banks in terms of assets. The United States makes up the majority of the bank’s remaining revenue, with Canada contributing two-thirds. It has done an outstanding job of expanding its nonbank business, efficiently running its banking activities, and generating some of the highest returns for stockholders in the industry.
Royal Bank of Canada (NYSE:RY) offers a variety of financial services, including corporate banking, wealth management, insurance, capital markets, and personal and commercial banking. The bank is mostly focused on Canada, although it also operates in the US and other countries. RBC’s global wealth management and capital market reach generate an extensive revenue stream.
For the fourth quarter of 2024, Royal Bank of Canada (NYSE:RY) reported earnings of $4.2 billion, with adjusted earnings rising 18% year over year to $4.4 billion. Its Wealth Management division achieved a significant milestone when global assets under administration topped $2 trillion for the first time, and Canadian wealth management AUA grew by 26% over the same period last year. The acquisition of HSBC Canada resulted in run-rate savings of over $400 million and increased quarterly earnings by $265 million. Furthermore, the bank reported record revenue in Corporate Investment Banking and Global Markets during the fourth quarter, and its pre-provision pretax earnings rose 14% year over year.
Royal Bank of Canada (NYSE:RY)’s quarterly dividend increased by $0.06, or 4%, reflecting its solid performance. It is a leading bank stock in terms of growing dividends. Over the last ten years, the bank has been able to raise payouts despite market crises and the pandemic.
Argus affirmed its Buy rating on Royal Bank of Canada (NYSE:RY) shares and increased their price target from $132 to $140. In a research note, the analyst informed investors that the company is still competitive, with a solid wealth management franchise and a growing market share in Canadian banking. Argus further stated that the $400 million run-rate annualized savings with HSBC Bank Canada, which was purchased in March 2024, is on target to reach the $740 million total by March 2026.
Rajiv Jain’s GQG Partners was the largest stakeholder in the company from among the funds in Insider Monkey’s database. It owns 5.75 million shares worth $717.89 million as of Q3.
Overall, Royal Bank of Canada (NYSE:RY) ranks first on our list of the 10 Best Financial Services Stocks To Buy According to Analysts. While we acknowledge the potential for RY to grow, our conviction lies in the belief that some 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 RY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. 10 Best Financial Services Stocks To Buy According to Analysts is originally published on Insider Monkey. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.