Banking Sector Stocks To Bank On In 2015

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Feb 03, 2015
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There is no denying the fact that the banking sector has gone through many ups and downs in the last few years. The stock market has not been very favorable when it comes to bank stocks because of the amount of external factors that determine their performance. However as in the case of all the industries, there are also some safe bets in the banking industry that will add to your value, in spite of the influence of external factors. Here are some of the bank stocks that are safe bets.

Morgan Stanley – The perfect blend of stability and volatility

The year 2014 was great for Morgan Stanley (MS, Financial) as share prices climbed by an impressive 23% due to various factors. IPO was one of the major reasons of success for Morgan Stanley for 2014 and if experts from Ernst & Young are to be believed, IPOs will have a favorable year in 2015 also. In that case, there is no doubt that Morgan Stanley is going to have a fantastic 2015. Q4 2014’s revenues were up by 12% when compared with 2013 figures. One of the most positive elements of Morgan Stanley for 2014 was its income from clients’ wealth management. This segment was up by 18% from Q4 2013 and it is expected to grow reasonably this year as well. Revenues in the Mergers & Acquisition Advisory segment grew by a phenomenal 43% compared to Q4 2013. Revenue from equity underwriting saw 100% growth in Q4 2014, because of the favorable scenario for IPOs. The following is the share price trend of Morgan Stanley for last year. The bank is expected to outperform expectations and provide immense value to its shareholders for 2015, if its IPO activity does well.

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Toronto Dominion Bank – Most Convenient Bank of America

There are some companies whose share prices do not tell the real picture of their performance. Toronto Dominion Bank (TD, Financial) is one of them. While looking at the share price trend of last year as shown in the chart below, it does look like TD’s share prices have come down, but it is a different picture in reality. TD’s net income had grown up 19% in 2014 and the figures are looking to increase further this year. The bank widely recognised as “America’s Most Convenient Bank” is known for its excellent customer service. It was voted as 2014’s Best Big Bank not without reasons. It is probably the only bank that is open during late evening hours and weekends to enable customers to perform their transactions with ease. Customer focus is the first priority at TD. Wall Street experts recommend that this is the perfect moment to buy TD’s shares because you might not get this price at a future point of time.

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Citigroup – The surprise package of 2015

If things fall in place, Citigroup (C, Financial) could well turn out to be the surprise package of 2015. It is a well-known fact that the bank is still reeling under the effect of the 2008 recession and financial crisis thereafter. However, there are a few positive factors for the bank for investors who are willing to take risks. The worth of Legacy Assets division of Citi Holdings that the bank is trying to shut down completely has come down to $103 billion from the threatening figure of $300 billion in 2011. There is indeed an element of risk here as this $103 billion could eat up the profits of the bank if not managed properly, but with a large level financial restructuring going on, one can hope that this will not happen. Citigroup’s focus for 2015 would be only markets with immense growth potential and as a first step towards this it has called off its unsuccessful operations in 11 international markets. While these create a big dent in the financials as of now, they come with huge long term benefits, which makes Citigroup a must buy option now. Citigroup is expected to be given approval by the Federal Bank for increasing its dividends marginally this year and this is extremely positive news for the bank as it will get back the confidence of shareholders. The following is the share price trend of Citigroup for the last few months.

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Conclusion

Banks have always been subject to risks and external factors. The three banks mentioned above are expected to brave the challenging market factors and come out strongly for 2015, silencing their critics and bringing utmost joy for their shareholders. At present, all these banks are available for a price that is cheaper than the worth of their potential. Hence, if you are looking for long term gains for cheap investment, these should be your best bets now.