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3 Bank Stocks to Buy on Yellen's Hawkish Rate Stance

Janet Yellen, the Fed Chairwoman, has left the door open for a rate hike as early as in March. In her speech before the Senate Committee on Banking, Housing, and Urban Affairs, she indicated that the economy is strong enough for another rate hike soon.

With job market gradually showing signs of strength and inflation nearing the Fed target of 2%, Yellen, in her prepared speech said, "…waiting too long to remove accommodation would be unwise", despite warning for uncertainty related to potential changes in the U.S. fiscal and other policies.

Driven by this more-than-expected hawkish stance, banks stocks rallied and many reached their all-time highs. Also, the S&P 500, the Dow Jones Industrial Average and the Nasdaq Composite reached all-time highs. The 10-year Treasury yields rose as well.

Banks, among the finance stocks, are one of the biggest gainers from the increase in interest rates. After a prolonged period of near zero rates, the Fed had raised rates in Dec 2015 for the first time in a decade. This was followed by another hike last December.

Basically, banking stocks have been surging since the election results on Nov 8, 2016. The Fed rate hike in Dec 2016 and impressive fourth-quarter results further aided this. The signing of executive order by President Donald Trump to ease regulations on the banking sector also fueled the rally.

Since Nov 8, the Zacks categorized Major Regional Banks industry gained 18.4%, while the Zacks categorized Banks & Thrifts industry jumped 24.3%. Both outpaced the 9.3% gain for S&P 500.

So, if you want to ride the rally and add a few banking stocks in your portfolio, this is the right time.

Selecting the Winning Banks

It is not that easy to pick a few stocks that will provide profitable returns. So, we have taken the help of the Zacks Stock Screener to make this task somewhat easy.

To shortlist the winning stocks, we screened the banks with a Growth Score of 'A' or 'B' and a market capitalization of $1.5 billion or more. Further, these stocks carry a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Here are the three stocks that cleared all the criteria:

Based in Charlotte, NC, Bank of America Corp.BAC surged almost 42% since the election results. With a market cap of $235.2 billion, the stock has a Zacks Rank #2 and Growth Score of 'B.'

Headquartered in Pine Bluff, AR, has a market cap of $1.9 billion and currently has a Zacks Rank #2. The company's shares gained more than 21% since Nov 8.

Eagle Bancorp, Inc.EGBN , headquartered in Bethesda, MD, has a market cap of $2.11 billion and currently has a Zacks Rank #2. The company's shares jumped over 29% since Nov 8.

Headquartered in Pine Bluff, AR, Simmons First National Corp.SFNC has a market cap of $1.9 billion and currently has a Zacks Rank #2. The company's shares gained more than 21% since Nov 8.

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Bank of America Corporation (BAC): Free Stock Analysis Report

Eagle Bancorp, Inc. (EGBN): Free Stock Analysis Report

Simmons First National Corporation (SFNC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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