Introduction – Bank stocks have experienced a significant rally in recent years, and the outlook for the sector remains positive. As the U.S. economy slows down, investors are gradually turning bullish toward bank stocks, driven by the Federal Reserve’s signal of no further rate hikes and expectations of rate cuts in 2024. This optimistic stance is further fueled by cooling inflation and surprisingly robust U.S. economic growth.
Key Factors for Bank Stocks in 2024
- Modest Revenue Growth: Analysts expect 2.1% sales growth for the bank ETF in 2024. This growth, combined with the Fed’s expected rate cuts, could contribute to a rally in bank stocks.
- Profit Per Share: The profit per share of the ETF is expected to drop just over 4% to $4.67 in 2024. However, some bank stocks are attractively priced, and targeted investments in the sector may turn out to be lucrative.
- Regional Bank Acquisitions: Some regional banks are not averse to acquiring more regional banks if those complement the existing with a market cap of $21 billion. This strategy has led to significant growth for these banks, with earnings expected to surge 127.8% for 2023 and 6.7% for 2024.
- Fed’s Interest Rate Projections: The Federal Reserve’s December Summary of Economic Projections suggests that the U.S. economy will slow down in 2024, with 1.4% growth. This outlook, combined with the Fed’s expected rate cuts, could further boost bank stocks.
Top Bank Stocks for 2024
Two analyst-recommended bank for 2024 are First Citizens BancShares (FCNCA) and Wintrust Financial (WTFC) . These have a Zacks Rank of 2 (Buy), and more than 70% of brokers recommend them as a strong buy or buy.
Conclusion
While the bank stock rally in 2024 is subject to various factors, including the Fed’s interest rate projections, profit per share, regional bank acquisitions, and modest revenue growth, the outlook for the sector remains positive. Investors should consider these factors and the recommended bank for 2024 when making their investment decisions.
