In this article, we are going to discuss the 5 best bank stocks to buy amid rising inflation. If you want to read our detailed analysis of these stocks, go directly to the 10 Best Bank Stocks to Buy Amid Rising Inflation.
5. Fifth Third Bancorp (NASDAQ:FITB)
Number of Hedge Fund Holders: 41
Fifth Third Bancorp (NASDAQ:FITB) offers diverse services like financial and banking services, consumer lending services, retail & commercial banking, and investment advisory services. On June 14, the firm announced a quarterly dividend of $0.30 per share for the shareholders of record June 30, payable on July 15.
In the first quarter of 2022, Kenneth C. Griffin’s Citadel Investment Group had the biggest stake in Fifth Third Bancorp (NASDAQ:FITB) with more than 4.3 million company shares worth $187.8 million. The hedge fund increased its activity in the company by 9390% compared to the preceding quarter.
According to the database of Insider Monkey that tracks 912 elite hedge funds, 41 funds were bullish on Fifth Third Bancorp (NASDAQ:FITB) with a combined stake value of $617.5 million, compared to 31 funds in the prior quarter.
On June 17, Fifth Third Bancorp (NASDAQ:FITB)’s shares were upgraded Outperform from Neutral with a price target of $44 by Baird analyst David George.
4. Capital One Financial Corporation (NYSE:COF)
Number of Hedge Fund Holders: 56
Capital One Financial Corporation (NYSE:COF), a Fortune 500 company, operates as a bank holding company through various segments: credit card, consumer banking and commercial banking. As of June 20, the firm has a forward P/E ratio of 5.34 and a forward dividend yield of 2.24%.
In 2021, Capital One Financial Corporation (NYSE:COF) repurchased shares worth $7.5 million. The company announced a buyback plan of $5 billion in January 2022. On April 1, the board of directors authorized a further share repurchase of $5 billion which will begin in the third quarter of 2022.
On June 17, Capital One Financial Corporation (NYSE:COF) was upgraded to Outperform from Neutral by Baird analyst David George.
Davis Funds mentioned Capital One Financial Corporation (NYSE:COF) in its fourth-quarter 2021 investor letter. Here is what it said:
“The absolute level of revenues and profits generated by such companies is in fact so large that most of the major financial holdings in the portfolio produce enough annual operating income individually that a number of them could, in theory, purchase several entire businesses among hundreds of choices within the S&P 1500 Index, using just a year’s cash earnings without dipping into capital. This is theoretical, as financial companies would not be in the business of buying healthcare or technology companies, for example, but we point out these facts to illustrate the sheer scale of the economics produced by single financial companies in a given year, which is often a multiple of the cash earnings yielded by companies in a host of other industries.
Given this cash-generation power, we are naturally drawn to what we believe are strong and profitable financial institutions when the price is right. Presently, we believe the valuations of our financial holdings are not only reasonable, but extremely compelling, and our portfolio composition reflects this view. Representative financial holdings in the Fund includes Capital One Financial.”
3. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 93
Wells Fargo & Company (NYSE:WFC) is another multinational Fortune 500 company that provides diverse services of consumer and commercial finance, banking, mortgage products and services, insurance, and investments. On April 26, the firm announced a quarterly dividend of $0.25 per share, payable on June 1 to shareholders of record June 5. The forward dividend yield of Wells Fargo & Company (NYSE:WFC) is 2.64%.
Amid the rising inflation and mortgage rates, the company is set to profit as the firm relies mostly on U.S. retail and commercial banks. The Q1 2022 earnings report showed that the average loans come up to $898 billion, up by 3% from last year.
On April 18, Barclays analyst Jason Goldberg increased the price target on the stock to $64 from $62 and maintained an Overweight rating.
Investment management firm Davis Funds mentioned Wells Fargo & Company (NYSE:WFC) in its fourth-quarter 2021 investor letter. Here is what it said:
“The absolute level of revenues and profits generated by such companies is in fact so large that most of the major financial holdings in the portfolio produce enough annual operating income individually that a number of them could, in theory, purchase several entire businesses among hundreds of choices within the S&P 1500 Index, using just a year’s cash earnings without dipping into capital. This is theoretical, as financial companies would not be in the business of buying healthcare or technology companies, for example, but we point out these facts to illustrate the sheer scale of the economics produced by single financial companies in a given year, which is often a multiple of the cash earnings yielded by companies in a host of other industries.
Given this cash-generation power, we are naturally drawn to what we believe are strong and profitable financial institutions when the price is right. Presently, we believe the valuations of our financial holdings are not only reasonable, but extremely compelling, and our portfolio composition reflects this view. Representative financial holdings in the Fund includes Wells Fargo.”
2. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 99
Bank of America Corporation (NYSE:BAC), one of the Big Four banking institutes of the U.S., is a financial and bank holding company. In the first quarter of 2022, the biggest shareholder in Bank of America Corporation (NYSE:BAC) was Warren Buffett’s Berkshire Hathaway Inc.
On June 24, Morgan Stanley analyst Betsy Graseck maintained an Equal Weight rating on Bank of America Corporation (NYSE:BAC)’s stock and lowered the price target from $49 to $47.
Based on the database of Insider Monkey that tracks 912 funds, 99 hedge funds had shares in Bank of America Corporation (NYSE:BAC) worth $45.4 billion in the first quarter of 2022. The hedge fund sentiment is positive as 84 funds held stakes in the previous quarter.
The PEG ratio of Bank of America Corporation (NYSE:BAC) is 1.30 while its industry has a PEG ratio of 1.36. The corporation repurchased $25 billion of common stock in 2021. In early April, the board of directors announced a regular quarterly cash dividend of $0.21 to be payable on June 24.
Here is what Aristotle Capital Management said about Bank of America Corporation (NYSE:BAC) in its first-quarter 2022 investor letter:
“We first invested in Bank of America during the second quarter of 2013. During our near decade as investors, Bank of America closed the chapter on the legacy issues from acquired Countrywide, including mortgage write-downs and substantial legal charges. In addition, it successfully turned the Merrill Lynch franchise into one of the leading U.S. brokerage and advisory firms. Thanks to what we consider to be a strong management team led by CEO Brian Moynihan, the bank went through years of simplification, improved its cost structure and efficiency ratio, and reduced risk. While we believe Bank of America remains a much-improved market leader, we decided to exit our position and use the proceeds to invest in Brookfield Asset Management.”
1. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 110
JPMorgan Chase & Co. (NYSE:JPM), the largest bank in the world in terms of market capitalization, is involved in providing investment banking and financial services. One of the Big Four banks in America, the company has a market cap of $343.87 billion as of June 24.
On May 24, JPMorgan Chase & Co. (NYSE:JPM) was upgraded to Buy from Hold and the price target was raised to $150 from $145 by Societe Generale analyst Andrew Lim, who cited positive guidance regarding the net interest income, investment bank trading revenues, and credit quality.
The hedge fund sentiment toward JPMorgan Chase & Co. (NYSE:JPM) is positive as 110 hedge funds were bullish on the company in the first quarter of 2022, compared to 107 in the last quarter.
JPMorgan Chase & Co. (NYSE:JPM) has a forward P/E ratio of 10.16 compared to its industry’s average forward P/E ratio of 9.47.
According to the database of Insider Monkey that tracks 912 elite hedge funds, the biggest stakeholder in JPMorgan Chase & Co. (NYSE:JPM) is Ken Fisher’s Fisher Asset Management with 7,760,086 shares worth $1.05 billion, making up 0.62% of the hedge fund’s portfolio.
JPMorgan Chase & Co. (NYSE:JPM) was mentioned in ClearBridge Investments’ fourth-quarter 2021 investor letter. Here is what it said:
“Our energy and financials holdings kept pace in the 2021 rally. In financials, JPMorgan benefited from strong economic growth, a rise in Treasury yields, and a benign credit environment.”
You can also take a peek at the 12 Best American Stocks To Buy in 2022 and 10 Cheap Chinese Stocks To Buy.
