After years of lackluster performance, financial stocks will be one of the best-performing sectors in 2024. A key reason for this is the Federal Reserve’s desire to lower interest rates. In addition to lowering borrowing costs, lower rates have increased the value of some banks’ investment portfolios.
And they could have an even better year in 2025. The banking sector, like the country’s monetary policy, is often compared to the turn of a battleship. However, Donald Trump campaigned on a platform of sweeping changes that, if enacted, would have a bullish impact on financial stocks.
One of Trump’s central campaign promises was to ease regulation of American companies. This will likely include easing the strict rules that banks have faced since the financial crisis of 2008 and 2009. effect somewhere in 2025.
Of course, every new administration brings with it a list of unknowns, and the Trump administration is no exception. Banks will be watching closely to get clarity on issues such as tariffs and what this will mean for the trade balance. It’s also possible that the Federal Reserve could slow the pace of its rate cuts.
But those are questions for another day. For now, investors are looking at which financial stocks they should expect to see solid returns in 2025. Here are three companies that look like definite winners.
JPMorgan Chase strives to buy the best
JPMorgan Chase & Co. Today
JPMorgan Chase & Co.
(As of 11/22/2024 ET)
- 52 week range
- US$152.71
▼
$249.15
- Dividend yield
- 2.01%
- P/E ratio
- 13.83
- Target price
- $229.31
JPMorgan Chase & Co. New York Stock Exchange: JPM appears to be the clear winner among financial stocks in the Trump administration. The day after the U.S. presidential election, JPM shares jumped 11%, nearly twice as high as other companies. Financial Sector SPDR ETF New York Stock Exchange: XLF. But this is not just a recent phenomenon. The banking giant’s stock has been one of the best stocks to own over the past five years. The total return on JPM stock at that time was 116.76%.
In 2024, JPM stock rose nearly 35% before the election. The stock hit a new all-time high in January and hasn’t looked back. Following the company’s earnings report in August, analysts are raising their price targets, meaning there could still be solid upside for investors on the sidelines.
Not only is it one of the safest banking stocks, but it is also a blue chip dividend stock. In JPMorgan’s case, the dividend has a 2.05% yield and has increased for 14 straight years.
Wells Fargo May Waive Asset Limit
Wells Fargo and Company Today
Wells Fargo and company
(As of 11/22/2024 ET)
- 52 week range
- $42.52
▼
$76.08
- Dividend yield
- 2.11%
- P/E ratio
- 15.79
- Target price
- $63.07
On the eve of the presidential elections, actions Wells Fargo and Co. New York Stock Exchange: WFC remained virtually unchanged for five years. It’s fair to say that the bank brought some trouble upon itself due to the fake accounts scandal that engulfed it in controversy in 2016.
Among the many fines the bank faced over the scandal, the most severe in terms of profits was the asset cap imposed by the Federal Reserve in 2018. At the time, Wells Fargo was prohibited from having more than $1.95 trillion in assets (i.e., an asset limit was set).
This cost Wells Fargo revenue from originating loans and subsequent interest payments on those loans. The asset limit has cost the bank more than $10 million in profits since its implementation.
The bank submitted the necessary documents to lift the restriction, and now this issue is within the competence of the Federal Reserve. While progress has slowed under the Biden administration, the Trump administration is expected to speed up the approval process. If the bank has carefully fulfilled all the requirements, a favorable decision is likely.
Goldman Sachs ready for deal
Goldman Sachs Group today
Goldman Sachs Group
(As of 11/22/2024 ET)
- 52 week range
- $334.87
▼
$607.15
- Dividend yield
- 1.99%
- P/E ratio
- 17.69
- Target price
- $542.00
The Biden administration has slowed the pace of mergers and acquisitions (M&A) and initial public offerings (IPOs), which are key sources of revenue for Goldman Sachs Group Inc. New York Stock Exchange: GS. After a record year for M&A activity in 2021, deal volume fell 42% in 2023, and while there were some notable deals in 2024, the sector It wouldn’t hurt to free yourself from the shackles.
This is what the administration, which supports business, will provide. And of course, lower taxes and less regulation will also help boost GS stock. The company’s shares jumped 12% after the election. However, analysts are raising their price targets for the company’s stock after the company posted strong earnings in October.
Before you consider Goldman Sachs Group, you should hear this.
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