Best banking stock to buy now in USA
Banking is somewhat a very complicated task in itself; it has to offer services to its customers without fail. Along with that they have to make sure the organization makes enough profit or money out of it, to be able to keep providing these financial services. However, the basic ideas behind the banking industry and how these businesses make their money are easy to understand. With that in mind, here’s an overview of the different types of banks, some important metrics investors should know, and three great beginner-friendly bank stocks to keep on your radar.
Banks can basically be categorized into three types based on the means of revenue generation and services offered.
The services provided by these banks include checking, and saving of accounts, mortgages, auto loan, deposit certificates and much more. So the basic idea behind making money by such banks is that they lend money to their customers at a relatively high interest rate than the rate they themselves borrow. Although these banks make most of their money from the elevated interest rates, but some part of their income also includes the amount collected from substantial fee revenues, ATM services, fees charged for account maintenance etc. It should also be noted that commercial banking is a cyclical business — when recessions (and pandemics like recently COVID-19) hit, unemployment rises and consumers and businesses often have trouble paying their bills.
They deal with clients from various institutes and those with net-worth in big numbers. Moreover, banks of this category help other companies go public through IPOs, issue debt securities, and advise on mergers and acquisitions, and for doing all these they obviously charge fees. Also, investment banks usually make money from few other means too, which include trading in equities, fixed-income securities, currencies, and commodities.
They also have wealth management businesses and often own substantial investment portfolios. Another important fact to note here is that, unlike commercial banks, investment banks tend to have an upper hand during recessions.
Lastly, universal banks. They are the ones that have capability and facilities for both commercial as well as investment banking operations. Mostly large U.S. banks are universal banks. We know that commercial banks get the bulk of their profits from interest income and investment banks primarily rely on fee income, thus evidently universal banks enjoy a nice combination of the both of these two categories.
So keeping these facts in mind, now we can look into some of the best banking stock to buy now in USA:
(NOTE: Mind you that the given list does not rank these banks in any particular order, due to the volatile nature of the market. However it will give you a rough idea about the parties you can put your trust in based on their track record.)
1. Bank of America
Recently they have turned out to be one of the most impressive turnaround stories in the post-financial-crisis era, in spite of the falling interest rates putting pressure on their profits. In recent years, they increased their loan portfolio at a much higher rate that wsa well ahead of their fellow competitors. Evidently, the company made major improvements in efficiency while building out its online and mobile technology. Moreover, the quality of Bank of America’s assets is of top notch and with a relatively high concentration of deposits that don’t pay interest, thus the bank is in a strong position to benefit if and when interest rates rise. One of the best Banking stock to buy now in USA
Price : 45.48 USD
Market Cap ($B) : 371.557
2. U.S. Bancorp
U.S. Bancorp is primarily categorized into commercial bank; the source of income includes income from loans and other consumer banking products virtually making up all of their revenues. Not only is U.S. Bancorp (known to most Americans as The U.S. Bank) focused on consumer banking, it also has been known for consistently producing some of the most impressive profitability and efficient metrics in the sector and has been an excellent dividend stock for the investors. The main reason underlying this is that it doesn’t depend on investment banking, which generally is the more volatile side of the banking business, their profitability and revenue tends to be more predictable and consistent than various other banks in this category.
Price : 57.59 USD
Market Cap ($B) : 85.394
3. JPMorgan Chase
JPMorgan Chase is undoubtedly the most profitable of the big universal banks, and it’s also the largest bank by market capitalization in the entire U.S. Moreover, the bank has operations in almost every area of both commercial as well as investment banking, and it has done quite well expanding its credit card and auto loan businesses in recent years. Also they have been quite impressive in embracing new technologies, and have made some key investments in financial technology, or fintech, companies.
Price : 160.92 USD
Market Cap ($B) : 475.562
4. Metropolitan Bank Holding Corp
Metropolitan Bank Holding Corp. is indulged into the provision of banking solutions through its subsidiary, the Metropolitan Commercial Bank. It provides a range of business, commercial and retail banking products and services to it’s customers which mainly includes small businesses, middle-market enterprises, public entities, and affluent individuals. The company’s headquarter is located in New York, NY.
Price : 99.41 USD
Market Cap ($B) : 1.08
5. Capital Bancorp Inc
Capital Bancorp, Inc. found in 1988 is a holding company, which is involved in the provision of commercial and consumer banking services through its subsidiary Capital Bank, NA. It operates through segments such as Commercial Banking, Capital Bank Home Loans, OpenSky, and Corporate. The Commercial Banking segment provides personalized service to commercial clients throughout the Washington, D.C. and Baltimore metropolitan areas. The Capital Bank Home Loans segment represents the company’s mortgage loan division. The OpenSky segment refers to the credit card division. Also, they are headquartered from Rockville, MD. Another amongst the best Banking stock to buy now in USA
Price : 27 USD
Market Cap ($B) : 0.38
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Note: This is our research and if you want to take a risk you can, please research your own and then buy