“Higher for longer.” That’s the drumbeat out of the Federal Reserve and suggests that interest rates are likely to remain elevated for longer than initially expected. With interest rates already higher than those seen in quite some time, several major bank stocks slipped into red territory for at least part of Monday afternoon, and even then, mostly fractionally.
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A range of banks were spotted in the red ink parade, including KeyCorp (NYSE:KEY), Comerica Bank (NYSE:CMA), Truist Financial (NYSE:TFC), JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC). The amounts each lost varied, as is so often the case, but each took its own hit. Interestingly, Truist managed to briefly throw off the red and gain fractionally, at least temporarily. The reason traces right back to the Fed and the “higher-for-longer” play that’s seeing rates on literally everything go up without an end in sight. With a regional banking crisis still fresh in many investors’ memories, the notion that it could happen again is coming back into play.
Indeed, it’s already started. Consider British bank Metro Bank, which just landed a $1.1 billion deal in order to spare it from the depths of insolvency and corporate death. While the troubles at Metro Bank seem to be largely contained and mostly related to issues of internal policies like longer opening hours and free lollipops, the notion that another contagion crisis could be in the offing is leaving some investors terrified.
Which Bank Stocks are Good Buys Right Now?
Interestingly, each bank on this list is considered a Moderate Buy by analysts currently, so the only question is which Moderate Buy to go with for those investors looking to get in. Currently, Comerica offers the best upside potential, as its $54.59 average price target means 36.2% upside potential. Meanwhile, JPMorgan Chase, with a $170.36 average price target, gives investors just 17.44% upside potential.
