In this article, we will be taking a look at 12 cheap bank stocks to buy. To skip our detailed analysis of the banking sector, you can go directly to see the5 Cheap Bank Stocks To Buy.
Major banks like JPMorgan Chase & Co. (NYSE:JPM), Morgan Stanley (NYSE:MS), and Goldman Sachs Group, Inc. (NYSE:GS), among others, are a few names in the market that have managed to remain steady in a strained economy. Kiran Ganesh, a multi-asset strategist at UBS, was quoted by WSJ as saying that 2023 has seen a strong start for bank stocks because of higher interest rates and a milder-than-expected economic contraction.
According to an S&P Global outlook on global banks for 2023, in the US, banks are expected to earn a return on equity in the high-single or low-double digits. These returns are also helped by higher interest rates. In 2022, it was recorded that the net interest income for banks grew by 15%-20%.
Our Methodology
To select the stocks for our list, we scanned Insider Monkey's database of 920 hedge funds' holdings and picked 12 bank stocks with P/E ratios less than 20 as of January 19. The list is ranked based on the stocks' P/E ratios, from the highest value for this metric to the lowest.
12. Cadence Bancorporation (NYSE:CADE)
Number of Hedge Fund Holders: 23
P/E Ratio as of January 19: 17.78
Cadence Bancorporation (NYSE:CADE) is a public company owned by BancorpSouth, Inc. The company is based in Atlanta. It has recently emerged as a new bank from a merger in 2022.
Morgan Stanley analyst Manan Gosalia initiated coverage of Cadence Bancorporation (NYSE:CADE) shares with an Equal Weight rating on December 5.
In the second quarter of 2022, Cadence Bancorporation (NYSE:CADE) saw an increase in its net interest income, which came in at almost $325 million, the highest figure it had ever reached. Morgan Stanley holds a $32 price target on the stock, representing significant upside potential from the stock's current share price of $24.41.
Cadence Bancorporation (NYSE:CADE) was found among the 13F holdings of 23 funds in the third quarter of 2022, with a total stake value of $127 million.
Bernzott Capital Advisors, an investment management company, mentioned Cadence Bancorporation (NYSE:CADE) in its second-quarter 2022 investor letter. Here's what the firm said:
“Cadence Bank (NYSE:CADE): Its merger of equals with BancorpSouth combines two long-standing franchises forming the sixth largest bank in its nine-state footprint in the attractive southeast market. The merger should offer revenue and cost synergies as the integration is executed over the coming quarters. This asset sensitive bank generates approximately one-third of revenues from feebased businesses such as wealth management and trust services which provides diversification and improves durability of financial results. The stock trades at a discount to peers and sports a 3.5% dividend yield.”
11. The Bank of New York Mellon Corporation (NYSE:BK)
Number of Hedge Fund Holders: 50
P/E Ratio as of January 19: 16.78
The Bank of New York Mellon Corporation (NYSE:BK) is a financial company based in New York. It operates through Securities Services, Market and Wealth Services, Investment and Wealth Management, and Other segments.
BofA's Ebrahim Poonawala reinstated The Bank of New York Mellon Corporation (NYSE:BK) coverage on January 12 with a Buy rating.
In 2022, The Bank of New York Mellon Corporation (NYSE:BK) fell significantly to below $40. While it has recovered to an extent in 2023, the stock is still trading below analyst price targets. BofA holds a $56 price target on the stock, for instance, while the stock is still trading below $50. The company's P/E ratio has also remained just below 17, showcasing its discounted price in the market.
There were 50 hedge funds long The Bank of New York Mellon Corporation (NYSE:BK) in the third quarter of 2022, with a total stake value of $3.3 billion.
The Bank of New York Mellon Corporation (NYSE:BK), like JPMorgan Chase & Co. (NYSE:JPM), Morgan Stanley (NYSE:MS), and Goldman Sachs Group, Inc. (NYSE:GS), is a bank stock with great potential, and many investors are piling into it today.
10. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 77
P/E Ratio as of January 19: 13.68
Wells Fargo & Company (NYSE:WFC) provides banking, investment, mortgage, and consumer and commercial finance products and services. It is based in San Francisco, California.
A Buy rating was reiterated on Wells Fargo & Company (NYSE:WFC) shares on January 18 by analyst Keith Horowitz at Citigroup.
Citigroup also raised its price target on Wells Fargo & Company (NYSE:WFC) shares on January 18 to $52, showing that analysts see upside potential in the stock. Wall Street's 12-month average price target on the stock is about $55.
There were 77 hedge funds long Wells Fargo & Company (NYSE:WFC) in the third quarter of 2022. Their total stake value was $4.9 billion.
9. Truist Financial Corporation (NYSE:TFC)
Number of Hedge Fund Holders: 39
P/E Ratio as of January 19: 11.02
Truist Financial Corporation (NYSE:TFC) is a holding company based in Charlotte, North Carolina. The company provides banking and trust services in the Southeastern and Mid-Atlantic US.
Jefferies analyst Ken Usdin upgraded Truist Financial Corporation (NYSE:TFC) shares from Hold to Buy on January 9.
About five years ago, Truist Financial Corporation (NYSE:TFC) traded for 15x earnings. As of this December, it was trading at 7.9x 2023 earnings estimates of $5.26. The stock's P/E also stands at just over 11, making the stock seem cheaply valued without a corresponding decrease in its business.
Truist Financial Corporation (NYSE:TFC) was found among the 13F holdings of 39 hedge funds as of the end of the third quarter. Their total stake value was $570 million.
ClearBridge Investments, an investment management firm, mentioned Truist Financial Corporation (NYSE:TFC) in its fourth-quarter 2021 investor letter. Here's what the firm said:
“Weakness among disruptors was offset by solid results from companies that we consider evolving opportunities and steady compounders. These are companies that are misunderstood or temporarily mispriced and either maintain leading market positions in the case of compounders or are undergoing dynamic improvements in the case of evolving opportunities. We had been opportunistically adding to both groups while they have been cyclically depressed due to pandemic-related issues. Many of these names are now benefiting from improving economic conditions in addition to company-specific drivers. Among evolving opportunities,Truist Financial is realizing the benefits of a merger of two strong regional banks during the pandemic.”
Truist Financial Corporation (NYSE:TFC), like JPMorgan Chase & Co. (NYSE:JPM), Morgan Stanley (NYSE:MS), and Goldman Sachs Group, Inc. (NYSE:GS), is among the top bank stocks hedge funds are eyeing today.
8. U.S. Bancorp (NYSE:USB)
Number of Hedge Fund Holders: 52
P/E Ratio as of January 19: 10.83
U.S. Bancorp (NYSE:USB) is based in Minneapolis, Minnesota. The bank operates in corporate and commercial banking, consumer and business banking, wealth management and investment services, payment services, and treasury and corporate support segments.
On January 10, Erika Najarian at UBS upgraded U.S. Bancorp (NYSE:USB) shares from Neutral to Buy.
Currently trading at just over $45, U.S. Bancorp (NYSE:USB) seems to be cheap with a forward P/E of just over 10, which is below its normal P/E of 13.6. Wall Street analysts expect an EPS growth of 8%-15% annually for the stock over the next two years.
Out of the 920 hedge funds tracked by Insider Monkey in the third quarter of 2022, 52 funds were long U.S. Bancorp (NYSE:USB). Their total stake value was $4.8 billion.
7. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 97
P/E Ratio as of January 19: 10.44
Bank of America Corporation (NYSE:BAC) is one of the most renowned banks in the US, and it is based in Charlotte, North Carolina. The company offers banking and financial products to individual consumers, small- and middle-market businesses, institutional investors, corporations, and governments across the globe.
On January 10, Odeon Capital's Dick Bove upgraded Bank of America Corporation (NYSE:BAC) shares from Hold to Buy.
Bank of America Corporation (NYSE:BAC) had 97 hedge funds long its stock in the third quarter of 2022. Their total stake value was $35.6 billion.
6. Huntington Bancshares Incorporated (NASDAQ:HBAN)
Number of Hedge Fund Holders: 23
P/E Ratio as of January 19: 10.77
Huntington Bancshares Incorporated (NASDAQ:HBAN) is the bank holding company for Huntington National Bank. It provides commercial, consumer, and mortgage banking services in the US, and is based in Columbus, Ohio.
On December 21, DA Davidson's Peter Winter initiated coverage of Huntington Bancshares Incorporated (NASDAQ:HBAN) shares with a Neutral rating.
Wall Street analysts have an average price target of $16.21 on the stock, translating into a potential total return in the high teens. As such, Huntington Bancshares Incorporated (NASDAQ:HBAN) seems to be currently trading at a bargain compared to the value it can achieve.
There were 23 funds long Huntington Bancshares Incorporated (NASDAQ:HBAN) in the third quarter of 2022. Their total stake value was $168 million.
Aristotle Capital Boston, LLC, an investment advisor, mentioned Huntington Bancshares Incorporated (NASDAQ:HBAN) in its third-quarter 2022 investor letter. Here's what the firm said:
“Huntington Bancshares Incorporated (NASDAQ:HBAN), an Ohio-based bank holding company, was removed from the portfolio based on our belief that shares were fully valued and there were better opportunities to deploy capital elsewhere within the portfolio.”
Click to continue reading and see the 5 Cheap Bank Stocks To Buy.
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Disclosure: None. 12 Cheap Bank Stocks To Buyis originally published on Insider Monkey.
FAQs
Which is the best banking stocks to buy? ›
...
Best Bank Shares To Buy in 2023.
| S.No. | Bank Name | Category |
|---|---|---|
| 1. | HDFC Bank Ltd. | Private |
| 2. | Kotak Mahindra Bank Ltd. | Private |
| 3. | ICICI Bank Ltd. | Private |
| 4. | Axis Bank Ltd. | Private |
HDFC Bank Ltd. Kotak Mahindra Bank Ltd. ICICI Bank Ltd. Axis Bank Ltd.
Is buying stock in a bank a good idea? ›Bank stocks can be excellent long-term investment opportunities, but they aren't right for all investors. Bank stocks are near the middle of the risk spectrum. They can be recession-prone and are sensitive to interest rate fluctuations, just to name two major risk factors.
Which bank stock has the highest dividend? ›| Bank Name | Dividend Yield |
|---|---|
| Bank of America (NYSE:BAC) | 2.2% |
| Bank of N.T. Butterfield & Son (NYSE:NTB) | 5.4% |
| JPMorgan Chase (NYSE:JPM) | 2.6% |
| People's United Financial (NASDAQ:PBCT) | 4.8% |
...
- Interest Income. ...
- Net Interest Income. ...
- Net Interest Margin. ...
- Cost to Income Ratio. ...
- Net Profit. ...
- Return on Assets (ROA) ...
- Return on Equity (ROE) ...
- Total Advances.
- State Bank of India (SBI)
- Citibank.
- Axis Bank.
- Kotak Mahindra Bank.
- Bank of India.
- Punjab National bank.
- ICICI bank.
- HDFC Bank.
- Amazon.com, Inc. (NASDAQ: AMZN)
- The Walt Disney Company (NYSE: DIS)
- Palo Alto Networks, Inc. (NASDAQ: PANW)
- The Boeing Company (NYSE: BA)
- Prologis, Inc. (NYSE: PLD)
- Johnson & Johnson (NYSE: JNJ)
- MercadoLibre, Inc. (NASDAQ: MELI)
- Costco Wholesale Corporation (NASDAQ: COST)
| Name of the company | Price (as of 8th Jan 2023) | Industry P/E |
|---|---|---|
| Ashoka Buildcon Ltd | ₹ 85.90 | 8.88 |
| L&T Finance Holdings Ltd | ₹ 86.90 | 13.21 |
| Steel Authority of India Ltd | ₹ 85.90 | 10.92 |
| Shree Renuka Sugars Ltd | ₹ 56.15 | 19.60 |
Reliance Power is an interesting penny stock for 2023 backed by robust fundamentals despite posting a INR 303.91 cr consolidated loss after tax in the September quarter that included a debt repayment of INR 390 cr.
How much money should I keep in bank vs invest? ›Aim for building the fund to three months of expenses, then splitting your savings between a savings account and investments until you have six to eight months' worth tucked away. After that, your savings should go into retirement and other goals—investing in something that earns more than a bank account.
Why are bank stocks so cheap? ›
Rising interest rates mean a decline in the market value of banks' securities investments and loans. Mark-to-market adjustments lower banks' profits. The decline in securities valuations has reduced investment banks' underwriting activity, which will lower profits.
Do bank stocks do well in a recession? ›"Bank stocks do not do well in a recession, and more and more investors are worried about a hard landing," said Matt Maley, chief market strategist at Miller Tabak.
What are the 3 dividend stocks to buy and hold forever? ›9 dividend stocks to hold
Prudential Financial Inc. Coca-Cola Co. AbbVie Inc. AT&T Inc.
- V.F. Corporation (VFC) ...
- Devon Energy (DVN) Devon Energy is a producer of oil and natural gas and holds a portfolio of oil and gas properties in the U.S. ...
- Dow Inc. (DOW) ...
- International Business Machines (IBM) ...
- Verizon Communications (VZ) ...
- AT&T (T) ...
- Intel (INTC) ...
- Philip Morris International (PM)
| S.No. | Name | CMP Rs. |
|---|---|---|
| 1. | Southern Gas | 71.60 |
| 2. | Standard Inds. | 30.50 |
| 3. | Geojit Fin. Ser. | 45.90 |
| 4. | CESC | 72.35 |
Use the P/E ratio to find potentially undervalued stocks
To evaluate a stock's value, investors will often divide the current price of one of its shares by its annual earnings per share. The resulting number is called the price-earnings ratio, or P/E ratio. The lower the P/E, the cheaper the company is.
- Assess the market. Before you add a position, note how the broader market is moving, since research suggests that roughly 75% of stocks move in step with the market. ...
- Identify a sector. ...
- Screen for stocks. ...
- Review the fundamentals. ...
- Check the charts.
One of the best ways of picking a quality stock is to look for banks that have been paying dividends for at least 5 to 10 years. Dividends are cash outlays that an unsuccessful bank could never produce. A history of dividend payments is one trait that all the best dividend stocks have.
Which bank is growing fast? ›One of the fastest-growing private banks in the nation, Yes Bank, enjoyed a revenue of Rs. 25,423 crores in the previous year. The bank boasts of over 1,000 branches across the country, complemented by 1,800 ATMs. It generates employment for over 23,800 people.
Which is the safest bank? ›Which bank gives good return? ›
| Bank/NBFC | 1 year | 3 year |
|---|---|---|
| Fincare Small Finance Bank | 6.25% | 6.50% |
| KTDFC | 6.00% | 6.00% |
| LIC HFL | 5.60% | 6.40% |
| Punjab and Sind Bank | 5.15% | 5.40% |
| Fastest-Growing Stocks | ||
|---|---|---|
| Price ($) | Revenue Growth Latest Quarter (%) | |
| Coterra Energy Inc. (CTRA) | 25.33 | 472.7 |
| Performance Food Group Co. (PFGC) | 60.75 | 41.7 |
| Tripadvisor Inc. (TRIP) | 18.16 | 51.5 |
- Niu Technologies (NASDAQ:NIU) Number of Hedge Fund Holders: 9. ...
- TopBuild Corp. (NYSE:BLD) ...
- Saia, Inc. (NASDAQ:SAIA) ...
- H&R Block, Inc. (NYSE:HRB) ...
- UiPath Inc. (NYSE:PATH) ...
- United Microelectronics Corporation (NYSE:UMC) Number of Hedge Fund Holders: 27. ...
- Asbury Automotive Group, Inc. (NYSE:ABG)
| Company | Price | Change |
|---|---|---|
| PNR Pentair PLC | 55.38 | +4.68 |
| GM General Motors Co | 39.32 | +3.03 |
| GNRC Generac Holdings Inc | 120.60 | +7.46 |
| DOV Dover Corp | 151.90 | +8.59 |
| Name | LTP | Change(%) |
|---|---|---|
| Mahindra & Mahindra .. | 1331.6 | 11.40 (0.9%) |
| ITC Ltd. | 344.8 | -1.20 (-0.4%) |
| Bharti Airtel Ltd. | 770.2 | -4.30 (-0.6%) |
| HDFC Bank Ltd. | 1614.2 | -1.65 (-0.1%) |
| S.No. | Name | CMP Rs. |
|---|---|---|
| 1. | Bombay Super Hyb | 521.70 |
| 2. | Raj Rayon Inds. | 53.15 |
| 3. | Rachana Infra. | 994.95 |
| 4. | Kamdhenu | 387.70 |
| S.No. | Name | CMP Rs. |
|---|---|---|
| 4. | Guj. Themis Bio. | 720.00 |
| 5. | Supreme Petroch. | 388.75 |
| 6. | Manali Petrochem | 77.55 |
| 7. | Tanla Platforms | 644.00 |
Penny stocks are quite popular with small investors because of their potential for huge gains. The gains may be in the range of 300% to 500% or even higher. Even if you have a small investment of Rs 100/-, you can still gain up to Rs 500/- profit.
Which penny stock will grow in future? ›- Vodafone Idea.
- Suzlon Energy.
- Alok Industries.
- Hemang Resources.
- Indian Overseas Bank.
Hemang Resources stands as the top performing penny stock of 2022, having surged a massive 1,929% between January 2022 and December 2022. From trading at less than Rs 4 at the start of 2022, the stock currently trades at Rs 66 having a 52-week high of Rs 81 touched on 31 October 2022.
Where should I put my money to grow? ›
- Stock ETFs and mutual funds. ...
- Low-cost index funds. ...
- Real estate (or REITs) ...
- Money market funds. ...
- Online savings accounts. ...
- Treasury bills. ...
- Certificates of Deposit.
The U.S. stock market has long been considered the source of the greatest returns for investors, outperforming all other types of investments including financial securities, real estate, commodities, and art collectibles over the past century.
What to do with money sitting in the bank? ›- Pay off debt. If you have a significant amount of debt, consider putting your extra money toward paying that down or off. ...
- Boost your emergency fund. ...
- Increase your investment contributions. ...
- Invest in yourself. ...
- Consider the timing. ...
- Go ahead and treat yourself.
- Bill Gates's Portfolio.
- Berkshire Hathaway, Inc.
- Waste Management, Inc.
- Canadian National Railway Company.
- Caterpillar Inc.
- Grupo Televisa S A B.
- Bill Gates FAQs.
In general, bank stocks tend to underperform during periods of high inflation. This is because higher inflation rates lead to higher interest rates, which can hurt banks' profitability. When interest rates rise, it becomes more expensive for banks to borrow money and lend it out to customers.
Are cheap stocks worth it? ›Penny stocks are risky and there's not a lot of information available on most stocks that trade over the counter. With so many alternatives to penny stocks that allow investors to start investing with $5 or less and still enjoy solid historical returns, there's really no reason to see penny stocks as a wise investment.
Will bank stocks do well in 2023? ›Recession-Ready Bank Stocks Can Rise 50% in 2023, Wells Fargo's Mayor Says - Bloomberg.
What is the safest stock during a recession? ›Utility Companies
The demand for electricity, waste management, gas, and water remains stable during a recession. So, the utility sector is a recession proof industry that can do wonders for your investment portfolio. Besides, utility companies have a stable cash flow and limited competition.
While no investment is guaranteed to be recession-proof, some tend to perform better than others during downturns. These include health care and consumer staples stocks (or funds tracking those sectors), large-cap stocks and income investments.
What are the 7 stocks to buy and hold forever? ›| TMUS | T-Mobile | $152.41 |
|---|---|---|
| GRC | Gorman-Rupp | $27.32 |
| GWRS | Global Water | $12.66 |
| ADUS | Addus HomeCare | $112.55 |
| AEM | Agnico Eagle Mines | $51.77 |
What is the most stable stock? ›
- Berkshire Hathaway. Berkshire Hathaway (NYSE:BRK. ...
- The Walt Disney Company. ...
- Vanguard High-Dividend Yield ETF. ...
- Procter & Gamble. ...
- Vanguard Real Estate Index Fund. ...
- Starbucks. ...
- Apple.
...
Best Stocks to Buy in India for Long Term for 2023.
| S.No. | Long Term Stocks India | Industry |
|---|---|---|
| 1. | Reliance Industries | Multinational Conglomerate |
| 2. | Tata Consultancy Services (TCS) | Information Technology |
| 3. | Infosys | Information Technology |
| 4. | HDFC Bank | Banking |
- Verizon. Sporting the highest dividend yield among its peers, Verizon yields 6.5%. ...
- Intel. The second-highest yielder is Intel, at 5.6%. ...
- Dow. Dow is the third-highest-yielding stock in the index, with a slightly lower yield than Intel at 5.5%.
Yes – the IRS considers dividends to be income, so you usually need to pay taxes on them. Even if you reinvest all of your dividends directly back into the same company or fund that paid you the dividends, you will pay taxes as they technically still passed through your hands.
What is the largest dividend ever paid? ›Apple's dividend is the largest new dividend ever paid by a company, beating the $1.3 billion record previously set by Cisco Systems, says S&P Capital IQ. Apple's dividend further extends the record dividends being paid by S&P 500 companies this year. Just Apple's dividend alone increases the S&P 500's payment by 3.9%.
Who is the king of penny stocks? ›Timothy Sykes is a penny stock trader who earned $1.65 million from a $12,415 Bar mitzvah gift through day trading while in college. Orange, Connecticut, U.S.
What are the top 5 penny stocks? ›...
Best Penny Stocks to Buy Now
- Muscle Maker, Inc. (NASDAQ:GRIL) ...
- Sunworks, Inc. (NASDAQ:SUNW) ...
- Bionano Genomics, Inc. ...
- Sorrento Therapeutics, Inc. ...
- Ring Energy, Inc. ...
- Canoo Inc.
Some professionals recommend that you devote no more than 10% of your individual stock holdings to penny stocks. It's also important to understand your risk tolerance. Generally speaking, the higher your risk tolerance, the more equipped you are to take on the risk that can come with investing in penny stocks.
What is the safest bank investment? ›U.S. Treasury bonds are widely considered the safest investments on earth. Because the United States government has never defaulted on its debt, investors see U.S. Treasuries as highly secure investment vehicles.
Is JP Morgan a good stock to buy? ›Out of 17 analysts, 7 (41.18%) are recommending JPM as a Strong Buy, 3 (17.65%) are recommending JPM as a Buy, 6 (35.29%) are recommending JPM as a Hold, 0 (0%) are recommending JPM as a Sell, and 1 (5.88%) are recommending JPM as a Strong Sell.
Is Warren Buffett selling bank stocks? ›
Warren Buffett's Berkshire Hathaway sold over 60% of its US Bancorp stock for about $4 billion.
Which bank stocks does Warren Buffett own? ›- Apple, Bank of America, Bank of New York Mellon, Chevron, Citigroup, Diageo, HP , and Markel , which also include shares held as of September 30, 2022 as disclosed in New England Asset Management's 13F filing on November 14, 2022.
- BYD , which is as of January 3, 2023.
JPMorgan Chase is the top largest bank in the US, with a balance sheet total of $3.31 trillion.
What can I invest in to make money fast? ›- How to invest $1,000 to make money fast.
- Play the stock market.
- Invest in a money-making course.
- Trade commodities.
- Trade cryptocurrencies.
- Use peer-to-peer lending.
- Trade options.
- Flip real estate contracts.
- Short-term certificates of deposit.
- Money market funds.
- Treasury bills, notes, bonds and TIPS.
- Corporate bonds.
- Dividend-paying stocks.
- Preferred stocks.
- Money market accounts.
- Fixed annuities.