I am bullish on Finance, and I think you should be too.
Let me list the reasons....
In 2013, the Financials have been high beta stocks. Consider
that the SPDR Financial ETF (ticker XLF) is up nearly +20% in
2013, and is up +40% over the last year.
Now, look forward. Finance earnings fundamentals look
Earnings estimates for the sector are moving up. Total
earnings for the Finance sector could be up +19.1% in Q2 after
+7.7% total earnings growth in Q1. The revisions trend is
decidedly in the positive category for the sector.
As the second largest group in the S&P 500, Financials can
lead earnings improvement in 2H-13. Four big U.S. banks
(BoA, Citi, Wells Fargo, and JP Morgan) could account for 25% of
S&P500 earnings improvement.
The U.S. momentum in the Finance Sector flows from numerous
- The booming U.S. stock market is one source;
- The U.S. economy adds more jobs month-on-month;
- An uptrend in long-term risk-free interest rates following
the Fed's 'Taper' buzz improved the operating backdrop;
- Housing shows ongoing improvement;
- Banking policy and money printing at the U.S. Fed, in
Europe, and in Japan has a positive effect on
Investment Funds, Investment Banking & Brokering, Real
Estate and Insurance industries showed up even stronger in the
Zacks Industry Ranks in early June.
This is the number one Zacks Sector right now.
In addition, buy-side investment strategists surveyed in June
2013 marked Financials as an
Overcapacity in the Financials sector, a risk of
over-regulation from Dodd-Frank implementation, and the lack of
internal earnings growth visibility are the significant
There is arguably no stronger sector right now!
My RTI Question For You?
With all this good news, are you banking on Finance for the
rest of 2013?
If you are, how are you investing in it? What stocks
interest you? What banking fundamentals do you find most
If you are not investing in Finance, where are you leaning
towards for returns outperformance in the rest of 2013?
CITIGROUP INC (C): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis
WELLS FARGO-NEW (WFC): Free Stock Analysis
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