AMTB - 7 Bank Stocks to Buy on the Dip
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With interest rates on the rise, you would think bank stocks would be having a banner year. Unfortunately, so far this year, banking stocks have struggled. Recession fears have outweighed the rising rate tailwind. However, this has created an opportunity when it comes to bank stocks to buy on the dip.
What do I mean? It’s possible that the market is overestimating how much of an impact a possible economic slowdown will have on the performance of lending institutions. While more challenging times may lay ahead, that’s not to say that we’re in for a repeat of the turmoil experienced by the banking industry during the late 2000s.
Furthermore, looking beyond possible near-term headwinds, long-term prospects remain bright for many banks. That’s especially the case with the following seven bank stocks to buy on the dip.
Each one earns an “A” rating in my Portfolio Grader. They currently trade at favorable prices, and could result in solid returns, from both price appreciation and dividends.
AMALAmalgamated Financial Corp$20.68AMTBAmerant Bancorp$28.8BANCBanc of California$18.22FBPFirst Bancorp$13.51MCBSMetroCity Bankshares$20.65SNEXStoneX Group$80.65THFFFirst National Corp$44.68Amalgamated Financial Corp (AMAL)
Based in New York, Amalgamated Financial Corp (NASDAQ:AMAL) is the parent company of Amalgamated Bank. This lending institution has an interesting history. Formed nearly 100 years by a labor union, it went public in 2018.
But even with its union ties, don’t think that AMAL stock isn’t a great opportunity for investors. Since debuting as a publicly-traded entity, it’s delivered solid earnings each year. With interest rates rising, earnings growth is expected for 2023.
Forecasts call for Amalgamated to earn $2.77 per share in 2023, up from an estimated $2.35 per share in 2022. Best of all, this bank stock trades at a low valuation. It trades for 8.8x 2022’s estimated earnings, and 7.4x 2023’s estimated earnings. It has a forward dividend yield of 1.55%. With a low payout ratio, there’s plenty of room for it to increase this dividend.
This stock earns an “A” rating in my Portfolio Grader.
Amerant Bancorp (AMTB)
Based in Coral Gables, Florida, Amerant Bancorp (NASDAQ:AMTB) is a regional bank, operating in Florida and Texas. Shares zoomed during the second half of 2021. Year-to-date though, it’s dipped in price.
Again though, this works in your favor. The market’s overly pessimistic outlook on banking plays like AMTB stock enables you to get in at what could be an attractive price in hindsight. Like with a lot of the other bank stocks to buy on the dip, rising interest rates mean increased earnings ahead.
Not only that, Amerant could see earnings growth another way: through organic expansion. Last month, the bank announced that it has entered the Tampa Bay commercial lending market. This could help drive loan growth, and in turn, earnings growth. Trading at a forward price-to-earnings (P/E) multiple of 12.2x, and with a forward dividend of 1.27%, consider it a buy.
This stock earns an “A” rating in my Portfolio Grader.
Banc of California (BANC)
As its name suggests, this is a bank based in the Golden State. With 29 branches in Southern California, Banc of California (NYSE:BANC) is yet another bank stock trading at a low valuation (8.5x earnings).
Although down modestly (9%) year to date, it may have a path to re-hit its 52-week high, and hit new highs. How? As a commentator online argued last month, its redeeming of preferred shares could help boost net income. Other moves this bank is making (such as increasing the size of its loan book) bode well for it as well.
Put it all together, and BANC stock is a great choice for investors looking to add banking sector exposure to their portfolios. Once pessimism about the banking sector’s prospects clear up, names like this one may make a solid recovery. Ahead of this happening, add this to your watchlist of potential banking buys.
This stock earns an “A” rating in my Portfolio Grader.
First Bancorp (FBP)
First Bancorp (NYSE:FBP) is a regional bank. Its operations, though, are not centered on the mainland United States. Most of its branches are located in Puerto Rico, with the rest located in both the U.S. and British Virgin Islands, as well as Florida.
There is much to like about FBP stock. It has not only a low valuation (8.8x earnings multiple). It has a moderately high dividend yield (3.56%) too. Earnings per share (EPS) are expected to rise from $1.52 this year, to $1.71 in 2023. Less than a quarter of its earnings are now being paid out as dividends. It may have room to grow its payout.
Since reinstating its dividend in 2018, its quarterly payout has gone from 0.03 cents to 12 cents. Further dividend increases, plus renewed bullishness for regional banks, could pave the way to higher prices for First Bancorp.
This stock earns an “A” rating in my Portfolio Grader.
MetroCity Bankshares (MCBS)
Similar to First Bancorp, MetroCity Bankshares (NASDAQ:MCBS) offers the combination of low valuation (P/E of 7.89x) and moderately-high yield (2.9% forward dividend). Founded initially to provide banking services to the Korean-American community, it’s grown considerably since its founding not that long ago.
Based in Georgia, it also has a presence in Alabama and Florida. Admittedly, with little news from it in recent months, it’s hard to pinpoint a specific catalyst that could get MCBS stock (down 25.7% year-to-date) moving back in the right direction. Still, if you’re bullish that a rebound for banking stocks is just around the corner, it’s one to keep an eye on.
This community banking play has many factors on its side. Its dividend pays you while you wait for it to bounce back. With today’s super-low valuation, even a modest re-rating, could mean a big move higher from today’s prices.
This stock earns an “A” rating in my Portfolio Grader.
StoneX Group (SNEX)
So far, we’ve looked at just traditional bank stocks. Now, let’s take a look at StoneX Group (NASDAQ:SNEX). StoneX is a financial services firm, not a traditional bank. As InvestorPlace’s Stavros Georgiadis noted last month, it helps connect investors to worldwide markets, such as commodities and foreign exchange (forex).
While not a banking stock per se, SNEX stock is still worth noting. Up year-to-date, it’s only dipped slightly from its 52-week high. This was due to its exposure to rising commodities prices. However, with commodities prices pulling back since spiking when Russia invaded Ukraine, analysts anticipate earnings to decline in 2023 versus in 2022.
Nevertheless, the party may not be over for StoneX Group. Other catalysts could help it down the road. For instance, its move into digital payments. Even if you are hesitant about buying it today, you may still want to keep it on your watchlist.
This stock earns an “A” rating in my Portfolio Grader.
First Financial Corporation (THFF)
First Financial Corporation (NASDAQ:THFF) is a regional bank centered in the Midwest. Headquartered in Indiana, it has operations as well in surrounding U.S. states. Like many of the names listed above, it has a low valuation of (8.6x multiple) and 2.43% dividend yield.
Founded in 1834, it’s safe to say this is a stable, venerable lending institution. Chances are, it’ll continue to generate steady earnings, gradually growing them over time. Its dividend has seen little growth over the past five years. However, THFF stock has in the past paid out special dividends.
For example, in 2017, it issued a special dividend of $1.50 per share. A few months back, First Financial also authorized a plan to buy back up to 10% of its outstanding shares. This is something else that could help move the stock higher. Conservative investors may want to check this one out.
This stock earns an “A” rating in my Portfolio Grader.
On the date of publication, Louis Navellier had long positions in AMTB, FBP, and SNEX. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
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