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Forget Wells Fargo, Buy These 4 Banking Stocks Instead

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Shares of Wells Fargo & CompanyWFC has lost around 6.8% since the announcement of the $190 million penalty pertaining to opening of unauthorized banking accounts, last week. Moreover, this San Francisco, CA-based banking giant has been facing a number of challenges lately.

A probe related to Wells Fargo's sales practices has been initiated by the U.S. Attorneys' Offices in Manhattan and San Francisco. The news was first reported by the Wall Street Journal. Notably, the company has temporarily suspended cross-selling of its financial products to customers via call centers.

Further, per Moody's Investors Service, the rating unit of Moody's Corp. (MCO), Wells Fargo's reputation will see some serious damage. Moody's noted, "…[T]he regulators' revelations are highly disturbing; they highlight that Wells Fargo's vaunted cross-selling capabilities were inflated, its incentive structure had led to pervasive inappropriate practices, and its retail banking sales process lacked adequate and effective oversight. As such, the implications of this announcement are credit negative." Nonetheless, the rating agency did not change its rating for the company.

Additionally, the U.S. Senate Banking Committee plans to hold a hearing over the matter. Wells Fargo's CEO, John Stumpf and other top executives have been asked to testify. Also, calls for Stumpf's resignation are gaining strength.

This Zacks Rank # 3 (Hold) stock, which was once considered to be one of the safest banks in the U.S., has been witnessing downward estimate revisions over the last 60 days. The Zacks Consensus Estimate for 2016 and 2017 has fallen nearly 1% and 1.9%, respectively.

However, it is not advisable to avoid bank stocks right now as the possibility of another Fed rate hike should make them perform better.

Selecting Winning Bank Stocks

With the help of the Zacks Stock Screener , we have zeroed in on four bank stocks with a market capitalization of over $2 billion. Further, all these stocks sport highly desirable 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 top four bank stocks that meet the criteria:

Headquartered in Dallas, TX, Comerica IncorporatedCMA is a banking and financial services company. This Zacks Rank #1 stock, with market capitalization of $8 billion, has been witnessing upward estimate revisions over the last 30 days. The Zacks Consensus Estimate for 2016 and 2017 has increased nearly 1.1% and 1.4%, respectively.

Hancock Holding CompanyHBHC , headquartered in Gulfport, MS, is a bank holding as well as financial holding company. This Zacks Rank #1 stock, with market capitalization of $2.5 billion, has been witnessing upward estimate revisions over the last 60 days. The Zacks Consensus Estimate for 2016 and 2017 has surged nearly 22.8% and 5.5%, respectively.

Associated Banc-CorpASB , based in Green Bay, WI, is a bank holding company providing various banking and nonbanking products and services. This Zacks Rank #2 stock, with market capitalization of $3 billion, has been witnessing upward estimate revisions over the last 30 days. The Zacks Consensus Estimate for 2016 and 2017 has jumped nearly 2.5% and 2.3%, respectively.

Chicago, IL-based MB Financial Inc.MBFI provides financial services to small and middle market businesses and individuals. This Zacks Rank #2 stock, with market capitalization of $2.8 billion, has been witnessing upward estimate revisions over the last 60 days. The Zacks Consensus Estimate for 2016 and 2017 has increased nearly 3.6% and 0.4%, respectively.

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COMERICA INC (CMA): Free Stock Analysis Report

WELLS FARGO-NEW (WFC): Free Stock Analysis Report

ASSOC BANC CORP (ASB): Free Stock Analysis Report

MB FINANCL INC (MBFI): Free Stock Analysis Report

HANCOCK HLDG CO (HBHC): Free Stock Analysis Report

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Zacks Investment Research

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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