5 Best Bank Stocks to Buy for Q3 2024

By:

Crispus Nyaga

Crispus is a Financial Analyst for Invezz covering the stock, cryptocurrency and forex markets. He’s an experienced analyst with more than 8 years of industry experience.... read more.

 & 

James Knight

James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.

Updated: Jul 5, 2024

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This page lists the top banking and financial stocks you can find right now. We have ranked these top stocks based on various metrics such as their recent market performance, dividends, and fundamental value. Simply scroll down to find out more. 

What are the 5 top bank stocks to buy?

Based on their financial health, profitability, market capitalization, and performance, these are our picks for the top 10 bank stocks to buy this year:

1. Morgan Stanley (NYSE: MS)

• Market Cap: $156 billion
• 2023 Revenue: $53.6 billion
• Price/Book Ratio: 1.7
• Price/Earnings: 17
• Revenue Growth: 2.9
• Stock Price: $95

Morgan Stanley is one of the best bank stocks to buy in the United States. The company has gone through major changes in the past few years, which has positioned it well in the wealth management industry. It has done that by acquiring E*Trade and Eaton Vance. 

Being a leader in the wealth management industry is a good thing since it is able to generate loads of passive fees. Also, the wealth management industry helps it to offset the volatility of the investment banking. Morgan Stanley’s revenue has jumped to over $53.6 billion and has more room to grow.

The only concern is that Morgan Stanley seems quite overvalued as it trades on a price-to-book ratio of 1.7.

2. Citigroup Inc. (NYSE: C)

• Market Cap: $117 billion
• 2023 Revenue: $70.7 billion
• Price/Book Ratio: 0.6
• Price/Earnings: 11
• Revenue Growth: -2.4%
• Stock Price: $60

Citigroup is another top bank stocks to consider as the company goes through a turnaround strategy. Under Jane Fraser, the company has laid off workers, closed branches, exited some markets, and changed its overall strategy. 

Her goal is to change the bank, make it leaner, and reduce its bureaucracy. She also intends to return to profitable growth in the next few years. This is unlike in the past when Citi wanted to be a global bank.

Citigroup is one of the cheapest Wall Street banks with a price-to-book ratio of 0.6 and a price-to-earnings multiple of 11. This multiple is lower than the S&P 500 index’s 20 even though the stock jumped by over 22% between June 2023 and June 2024.

3. JP Morgan (NYSE: JPM)

• Market Cap: $573billion
• 2023 Revenue: $70.7 billion
• Price/Book Ratio: 1.87
• Price/Earnings: 12
• Revenue Growth: 8.7%
• Stock Price: $60

JPMorgan is another good bank stock to invest in. The biggest bank in the US, has grown rapidly in the past few years, which has helped its market cap to near $600 billion. It now holds most of US deposits and is known for having a fortress balance sheet.

JPMorgan is also highly diversified. It has a huge retail bank and is one of the biggest players in the asset management industry with trillions in assets. JPMorgan is also a major player in wealth management and investment bank.

All this has helped JPMorgan’s revenue continue soaring in the past few years. It soared from over $110 billion in 2019 to over $146 billion in 2023. It is also a highly profitable bank that made a net profit of almost $50 billion. It returned some of these funds through dividends and used the rest to reinforce its balance sheet.

4. Bank of America (NYSE: BAC)

• Market Cap: $310 billion
• 2023 Revenue: $94 billion
• Price/Book Ratio: 1.18
• Price/Earnings: 12
• Revenue Growth: 8.7%
• Stock Price: $38.8

Bank of America is another blue-chip bank stock to buy and hold. It is the second-biggest bank in the US after JPMorgan. Over the years, it has diversified its business by moving to other industries like wealth management, asset management, and investment banking.

Bank of America’s revenue has been growing in the past few years, moving from over $85 billion in 2019 to over $94 billion in 2023. It also makes over $25 billion in net profit, making it one of the most profitable banks in the world. 

Bank of America has a solid balance sheet, good management, and the ability to continue growing in the coming years.

5. Goldman Sachs (NYSE: GS)

• Market Cap: $154 billion
• 2023 Revenue: $45 billion
• Price/Book Ratio: 1.18
• Price/Earnings: 12.3
• Revenue Growth: 3.76%
• Stock Price: $38.8

Goldman Sachs is another great bank stock to invest in. It is one of the most prestigious names in Wall Street, where it has a  big market share in the investment banking industry. The company makes money in wealth management, trading, and investment banking. 

In the past few years, the company has had a tumultuous period as its attempts to move into mass-market banking faded. It also sold GreenSky, a company it acquired in 2021 for a big loss as the management worked to implement a turnaround.

The remaining bank is a leaner organization that has ventured into other areas like private credit. It expects to continue growing into other businesses like the highly profitable wealth management.

Where to buy the best bank stocks

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How to trade and invest in financial stocks?

To invest in financial stocks, follow this quick guide.

1. Open a trading account: choose a suitable online stockbroker and open a share-dealing account. Pay attention to commissions and look out for hidden charges like interest on margins (the borrowed money) or service fees for withdrawals. Also, take note of trading limits and minimum account balances.
2. Choose the bank Stock to trade: you will see a list of all the available bank stocks on your broker’s online platform. There are technical and fundamental filters you can use to narrow the list to a handful of bank stocks. Then, perform your fundamental analysis to choose the most healthy, innovative, and profitable banks to trade.
3. Start trading: when you’ve selected the bank stock to trade, input the number of shares you want to buy and hit the buy button. Remember not to risk more than 2% of your capital in any single trade and don’t trade with the money you can’t afford to lose.

What are banking & financial stocks?

A financial stock is a publicly-traded company that provides financial services to clients. This includes things like savings accounts, ISAs, investment banking, loans, payment cards and much more. 

Typically, financial stocks are the stock type that is most affected by broader market behaviour. The banking industry provides most of the capital that businesses need to operate. It serves as a conduit through which people’s net income are made available to those who need them to execute their projects. Basically, banks lend depositors’ money to businesses and individuals who need them, and they make profits from the difference between the interest income on the loans and the interests it pays to depositors.

When the global financial system is on the rise, financial stocks are great securities to hold, whereas when a bear market is on the horizon, it could be time to sell up. 

What types of banking stock are there?

Generally, there are three categories of banks: commercial banks, investment banks, and universal banks.

• Commercial banks are the most common ones and are actually what most people know as banks. They provide services to consumers and businesses, such as checking and savings accounts, credit cards, auto loans, mortgages, and certificates of deposit. Wells Fargo (NYSE:WFC) is an example of a commercial bank.
• Investment banks provide wealth management and investment services to institutional clients such as hedge funds and high-net-worth individuals. They issue debt securities, help companies go public through initial public offerings (IPOs), and also provide advisory services on mergers and acquisitions. For any service they provide, they earn service fees. Examples include Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS).
• Universal banks offer both commercial banking and investment banking services. So, they enjoy the benefits of having a diversified revenue stream, but they also bear the risks of both commercial and investment banking operations. Examples include Barclays (LSE: BARC), Bank of America (NYSE:BAC), Citigroup (NYSE:C), and JPMorgan Chase (NYSE:JPM).

What are the trading hours for bank stocks?

In the US market, stocks are traded between 9.30 am and 4 pm ET when the NYSE and Nasdaq are open. However, trading can also extend into the after-hours (the period after the market has closed for the day) and the pre-market (before the market opens) due to the availability of electronic communication networks (ECN). In the UK market, stocks are usually traded between 8 am and 4.30 pm when the London Stock Exchange is open.

Are bank stocks a good investment?

Investing in financial stocks is usually a good decision, though as previously mentioned, broader market trends are extremely important when taking the plunge. Many people are put off by banking stocks because it takes a little more research to understand how a bank makes money, and whether it’s a good business.

A bank collects money from depositors who have savings, checking accounts, or fixed-income products. It then lends the money to other individuals and corporations who apply for mortgages, personal loans, or business loans, and it makes profits from the interest it charges on those loans. Thus, investors need to study banks’ interest rates, loan approvals, and default rates to know which ones to invest in.

Bank stocks are generally a good investment because most of them have returned profits during a difficult economic period. Also, the prices of bank stocks are relatively low, and fundamentals support significant growth in the medium term.

Ensure you do your research to choose the most profitable and innovative banks. However, don’t neglect technical analysis since bank stocks tend to fluctuate in tight trading ranges or ebb and flow steadily. It could be better to buy on dips, but you can also trade breakouts.

Methodology: How we choose the best bank stocks

At Invezz, our mission is to empower our readers with the most accurate and reliable financial information. Our curated selection of the best stocks in specific industries is designed to provide investors with well-researched, expertly reviewed stock recommendations. Our team follows a rigorous process to ensure our readers receive high-quality, trustworthy stock selections.

• Initial screening. Our team of experienced stock market analysts conducts an initial screening of stocks within the chosen industry. This involves analyzing a broad range of companies based on key financial metrics such as revenue growth, profitability, debt levels, and market capitalization.
• Earnings reports and financial analysis. Analysts review the latest earnings reports of shortlisted companies. This includes a detailed assessment of financial statements, looking for consistent earnings growth, strong balance sheets, and positive cash flow trends. Special attention is given to year-over-year performance and quarterly results.
• Sector analysis. A comprehensive sector analysis is conducted to understand the macroeconomic factors affecting the industry. This includes examining market trends, competitive landscape, regulatory changes, and technological advancements. Our analysts utilize industry reports, market research, and economic forecasts to gain a holistic view of the sector.
• Analyst recommendations. We consider recommendations from reputable sources such as Barron’s and Zacks. These sources provide expert opinions and ratings on stocks, which serve as an additional layer of validation for our selections. Incorporating external analyst recommendations ensures that our curated stocks are backed by a consensus of expert views.
• Internal review. After the initial selection by our analysts, the chosen stocks are reviewed by a sub-editor. The sub-editor ensures that the analysis is clear, concise, and adheres to Invezz’s editorial guidelines. This review process helps maintain the quality and readability of our content, making it accessible to a broad audience.
• Quarterly updates. To ensure our stock recommendations remain relevant and up-to-date, we update the curated section quarterly. Each update cycle involves re-evaluating the stocks based on the latest financial reports, industry developments, and market conditions. This regular update process ensures that our recommendations reflect the most current information available.

Our approach combines expert analysis, comprehensive research, and regular updates to deliver reliable and insightful investment recommendations. Read more about our review process and editorial policy.

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