We recently compiled a list of the 7 Cheap Bank Stocks To Invest In Before They Take Off. In this article, we are going to take a look at where Woori Financial Group Inc. (NYSE:WF) stands against the other cheap bank stocks.
Banking Sector Outlook 2025
On December 10 Fidelity Investment released its banking sector outlook for 2025, highlighting tailwinds for the sector which can result in positive momentum for the year. According to Matt Reed, the Fidelity Sector Portfolio Manager, the financial sector experienced significant growth in 2024. The industry is reported to have increased by over 30% as of mid-December, outperforming the broader S&P 500 index by 5 percentage points. As per the analysts, the surge was driven by the post-election boost and improved economic conditions. Reed highlighted that despite the concerns such as the collapse of several small-to-mid-sized banks at the beginning of 2024. The market perceived these issues as isolated rather than a wider crisis, thereby allowing the economic strength to overshadow these challenges quicker than anticipated.
Matt Reeds noted that the financial sector is expected to remain on solid ground in 2025, driven by steady US economic growth. The cyclical nature of financial stocks means their performance is closely linked to the broader economy, which is showing signs of resilience and a potential soft landing. Fidelity Investment identified that larger institutions are expected to potentially recover from past regulatory issues and capitalize on improved market conditions. Moreover, regional banks with strong credit quality and strategic acquisitions are also expected to increase their market shares. Lastly, payment processing companies and financial technology companies are also expected to thrive due to their sensitivity to economic activity and consumer spending patterns.
The report highlighted that while the outlook is optimistic there are some inherent risks including further interest rate cuts, which could compress net interest margins for banks, impacting profitability. In addition, some banks may face challenges related to their commercial real estate holdings if economic conditions worsen, leading to weaker loan demand and increased nonperforming loans.
Our Methodology
To compile the list of 7 cheap bank stocks to invest in before they take off, we used the Finviz stock screener, Seeking Alpha, and Yahoo Finance. Using the screener we aggregated an initial list of bank stocks trading under a Forward P/E of 15 with positive earnings growth and analyst upside potential of at least 25%. Next, we cross-checked the Forward P/E for each stock from Seeking Alpha, earnings growth from Yahoo Finance, and analyst upside potential from CNN. Lastly, we ranked the stocks in ascending order of the analyst upside potential. Please note that the data was collected on January 31, 2025.
Why do we care about what hedge funds do? 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).
A businessman in a suit shaking hands in a modern office building, showcasing the company’s investment banking division.
Woori Financial Group Inc. (NYSE:WF)
Earnings Growth: 303.17%
Forward P/E Ratio: 3.8
Analyst Upside Potential: 30.47%
Woori Financial Group Inc. (NYSE:WF) is a financial holding company based in South Korea. It provides various financial services including banking, financial technology, research and analysis, credit, and investment. The group provides banking services through its primary subsidiary Woori Bank, which offers traditional banking services such as accepting deposits, providing loans, and facilitating foreign currency exchanges.
During the fiscal third quarter of 2024, Woori Financial Group Inc. (NYSE:WF) posted robust growth. Its cumulative net income of KRW 2.6591 trillion grew 9.1% year-over-year and surpassed last year’s total by about KRW 150 billion within just three quarters. During the third quarter alone the group posted KRW 903.6 billion in net income and exceeded market expectations of KRW 900 billion for the second consecutive quarter. Management noted that the group performed well despite challenges such as margin contraction due to falling market interest rates.
Woori Financial Group Inc. (NYSE:WF) is actively working to enhance its non-bank business operations and diversify its income sources. For instance, in August 2024, the group merged Woori Investment Bank and F&I Securities to create a new entity called Woori Investment Securities. Moreover, it also signed a Framework Partnership Agreement (FPA) with Toon Yang and ABL Insurance, laying the groundwork for entering the insurance industry. It is one of the cheap bank stocks to invest in before they take off.
Overall WF ranks 6th on our list of the cheap bank stocks to invest in before they take off. While we acknowledge the potential of WF as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than WF but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.