Bank stocks are on investors’ radar after the recent Federal Reserve stress tests and previous issues with regional banks.
Despite all that, many bank stocks have been trading well.
Because of improved technicals, stress test results, and regional bank headlines being in the rearview mirror, investors are seeking out the best bank stocks to buy.
If the economy continues to hum along and if the employment market remains strong, investing in bank stocks may be the right move. However, if the economy starts to roll over, active investors will not want to hold onto bank stocks.
Investors who want exposure to the banking industry may benefit from these top bank stocks.
JPMorgan (JPM)
Considered the most reliable blue-chip bank stocks, JPMorgan (NYSE:JPM) has earned its title. Led by CEO Jamie Dimon, the firm has done a marvelous job navigating the various economic developments over the last few years.
JPMorgan has carefully picked its response to each situation, while Dimon remains cautiously optimistic about the current climate. That’s what investors want — a CEO that’s opportunistic but also keeps a close eye on developing risks.
It helps that the stock is trading quite well, recently breaking out over the $144 area and holding above its short-term moving averages. If it can continue higher, then JPMorgan stock may be heading to $150 and beyond.
The only hang-up?
The firm reports earnings on Friday. When JPMorgan last reported earnings, it crushed earnings and revenue expectations. Further, the firm will pass along a modest 5% dividend increase after its stress test results and plans to continue buying back its stock.
Goldman Sachs (GS)
When it comes to asset management, Goldman Sachs (NYSE:GS) is atop the list. While it may not be a top money-center bank or conglomerate bank like JPMorgan, Goldman Sachs can hold its own — and lead — in many ways.
That said, the stock has been struggling. Perhaps if investors can snag shares closer to $300, the risk/reward will be a bit better.
Given the outlook for 2023, that may be the case. Analysts expect revenue to dip slightly this year and for earnings to fall about 12% to $26.43 a share. That leaves the stock trading at 12 times earnings.
While hardly expensive, the lack of growth is a concern unless Goldman can surprise the upside. We’ll find out when it reports on Wednesday, July 19. In any regard, analysts expect Goldman to grow earnings almost 40% next year to roughly $36.80 a share. If that’s the case, the stock trades at just over 8.5 times earnings.
The stock currently yields just over 3.1% and the company is expected to hike that payout by another 10% after its stress test results.
SoFi Technologies (SOFI)
SoFi Technologies (NASDAQ:SOFI) stock has been buried from its highs, suffering a peak-to-trough decline of 85% in the bear market. However, the bulls have been in control lately, with SoFi stock more than doubling from its late-May low to its high in mid-June.
A bear market hit growth stocks harder than many others, while SoFi had to contend with the unique issue of student loan delays. Despite the headwinds, the firm is expected to keep on chugging when it comes to growth.
Analysts are forecast to grow about 30% to $2 billion this year, followed by 25% growth in 2024 to $2.5 billion. While SoFi is still losing money, the losses are expected to be cut in half this year before flipping to slightly positive in 2024.
Despite the forecasts, SOFI stock is still down significantly, but it has serious long-term potential. Investors may realize that upside sooner if the US economy outperforms or growth stocks catch on fire.
On the date of publication, Bret Kenwell held a long position in JPM. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.