Bank stocks have been the talk of Wall Street throughout the past year. Analysts constantly switch their view from buy to sell never letting the average investor know which action to take. I’m here to saw that there are plenty of reasons to be bullish on bank stocks. Here are my five reasons:
1. U.S. Economy is Improving – The sell off in equities has nothing to do with weakness in the U.S. economy rather than global fears. In fact, the U.S. economy is improving month by month. We are seeing a rise in consumer spending and have seen the U.S. employment rate fall steadily since hitting a high in January.
2. Regulatory Fears Are Excessive –All these expected regulations on Wall Street I feel are overblown. Everyone is scared that the government will bring down the hammer, which has kept these stocks price points low.
3. Everyone Else is Selling – Warren Buffet has always said “It pays to be greedy when others are fearful and fearful when others are greedy proves itself time and time again.” Right now is a time to be greedy. Snatch up those undervalued banking stock and reap the rewards.
4. European Worries Are Overblown – The fact is many U.S. banks have no exposure in retail business throughout Europe. This means that they are not exposed to all the failures ahead and have no reason to worry.
5. Expect Lower Tax Bills Ahead – Due to the huge losses many banks absorbed the past year or so will mean that they pay virtually no taxes this year. That will help earnings estimates and allow banks to increase book value if they beat estimates.
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Disclosure: "Long C & GS"