In this article, we discuss 5 of the best financial services stocks to buy now. If you want to check out some more of the best financial services stocks, go directly to 11 Best Financial Services Stocks to Buy Now.
5. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 99
Bank of America Corporation (NYSE:BAC) is a leading U.S. bank that provides consumer and corporate banking. On 10/11, Vivek Juneja of JPMorgan cut his price target on Bank of America to $35.50 from $40.50 but kept an ‘Overweight’ rating. Although Bank of America Corporation (NYSE:BAC) has benefited from the rising interest rates with higher net interest income, the rate of the rise could cause a recession which might not be good for Bank of America’s future earnings per share in the next year.
In the long term, Bank of America Corporation (NYSE:BAC) is still attractive given its market share and scale.
99 hedge funds in our database were long Bank of America Corporation (NYSE:BAC) at the end of the second quarter.
4. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 104
JPMorgan Chase & Co. (NYSE:JPM) is a leading U.S. bank that provides consumer and corporate banking. On October 14, JPMorgan Chase & Co. (NYSE:JPM) reported third quarter EPS of $3.12 versus the consensus of $2.88. While earnings have been strong, JPMorgan Chase & Co. (NYSE:JPM) is facing headwinds that could increase if there is a recession next year. JPMorgan Chase & Co. (NYSE:JPM) is attractive in the long term given its competitive advantages and scale.
104 hedge funds in our database were long JPMorgan Chase & Co. (NYSE:JPM) at the end of Q2 2022.
Vltava Fund said the following about JPMorgan Chase & Co. (NYSE:JPM) in its Q3 2022 investor letter,
“We regard JPM to be the strongest and best- managed bank in the world. It is a leader in investment banking, commercial banking, credit cards, and asset management. Its size (the largest bank in the USA, with nearly USD 4,000 billion in assets) and diversification give it a strong competitive advantage that is compounded by its cost advantages and the high costs to clients associated with switching banks. JPM’s management prides itself on running the only large bank to avoid major instability over the long term. JP Morgan’s quality and strength first became fully evident in 2008 under the leadership of its CEO Jamie Dimon. Not only did JP Morgan help to stabilize the market by taking over the failing Bear Stearns in the spring of that year, but throughout the Great Financial Crisis it was the only big US bank that did not require government assistance and it was highly profitable even in the difficult year of 2008. A well-functioning and efficient bank can be a very good long-term investment, because the interest compounding effect works well here. JPM’s return on equity (ROE) is well into the double digits and this puts it in a good position to continue producing better long-term returns than does the market. JPM has been very profitable even during years when interest rates were close to zero. The current – and perhaps not temporary – return to somewhat more normal, higher interest rates should have a significantly positive impact on the bank’s interest income and overall profitability
3. Berkshire Hathaway Inc. (NYSE:BRK-B)
Number of Hedge Fund Holders: 109
Berkshire Hathaway Inc. (NYSE:BRK-B) is a holding company that owns a diverse set of businesses that include insurance companies. Due to the market weakness, Berkshire Hathaway Inc. (NYSE:BRK-B) shares are down 8.8% year to date and the company also faces headwinds if the economy slows next year. If market prices decline due to a recession, the value of many of Berkshire Hathaway Inc. (NYSE:BRK-B)’s businesses could decline too at least in the near term. Nevertheless, Berkshire Hathaway Inc. (NYSE:BRK-B) is attractive in the long term given the competitive advantages of many of its businesses.
109 hedge funds in our database were long Berkshire Hathaway Inc. (NYSE:BRK-B) at the end of Q2 2022.
2. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 137
Mastercard Incorporated (NYSE:MA) is a payments technology company that provides transaction processing and other payment related products and services in the United States and internationally. On 10/13, Bryan Keane of Deutsche Bank cut his price target to $375 from $440 and kept a ‘Buy’ rating on shares citing worsening currency headwinds. If the economy worsens, Mastercard Incorporated (NYSE:MA) could find it more difficult to earn the profits that analysts expect.
Nevertheless, Mastercard Incorporated (NYSE:MA) is still attractive long term given its scale and normalized earnings per share potential.
137 hedge funds we track were long Mastercard Incorporated (NYSE:MA) at the end of the second quarter.
1. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 166
Visa Inc. (NYSE:V) is a leading payments technology company. On 10/13, Bryan Keane of Deutsche Bank cut his price target to $260 from $270 on Visa Inc. (NYSE:V) but kept a ‘Buy’ rating. Keane notes the worsening currency headwinds due to the strong dollar as well as higher international expenses due to the rising interest rates. In the long term, Visa Inc. (NYSE:V) is attractive given the growing global economy and Visa Inc. (NYSE:V)’s market share.
166 hedge funds in our database owned shares of Visa Inc. (NYSE:V) at the end of Q2 2022, ranking it #1 on our list of 11 Best Financial Services Stocks to Buy Now.
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