US BANK Stocks Analysis


Whenever there is a recession, the banks are greatly affected but when the economy recovers, they will recover too. Is it a good time to look at the banks and to invest in them? We need to understand first why the banks are underperforming. The number one reason is credit losses, that is, customers not repaying their debts. With a high unemployment rate, many people cannot afford to repay their debt. Delinquency rates on credit card loans, auto loans, and mortgages are all increasing. Moreover, there is less spending and people are less likely to take out new loans. But this is not a banking crisis. 2008 was a banking crisis. But today, the banks are very strong. There have been so much regulations on them since the great recession that they have really good balance sheet. That's why we need to look at the banks. JPMorgan Chase $JPM is the largest bank in the US by AUM and largest in the world by market cap. It is diversified business since they engage in custodian banking, retail banking and investment banking. JPMorgan Chase has a good management and they have been able to expand very rapidly in recent years (especially with the credit card business) despite low interest rates but unfortunately, there is a premium on the stock. It is the most expensive of all the banks. Bank of America $$BAC was called the Amazon of banks $AMZN since it has been growing its business so rapidly in recent years. If you're looking for a growth stock among banks, Bank of America is a good candidate but they are less diversified compared to JPMorgan Chase. Wells Fargo $$WFC used to be the leader in the industry but in recent years the business has stopped growing after the fake account scandal. Bank of America and especially JPMorgan Chase has eating market share and they may not be the bank with the largest number of branches for long. It will take some time for Wells Fargo to recover. Citigroup $$C is a global bank. The stock is very cheap but the problem is that the returns on assets and returns on equity has been lower than average. It is not because the stock is cheap that we need to invest in it even if it is not growing. Goldman Sachs $GS is mostly an investment bank although in recent years they have been trying to do some retail banking with Marcus and the Apple Credit card $AAPL . Goldman Sachs remain a trading bank and it is the riskiest of all the banks. Morgan Stanley $$MS is known to be an investment bank but they are changing an now focusing more on wealth management. They are acquiring E*trade. The problem that I have with Morgan Stanley is that I don't really like the loans they have on their balance sheet. I have JPMorgan in my portfolio because I like the management, it is expanding, it is diversified. When I first bought the shares it was very cheap and I still believe that it is cheap but even with the premium, I believe that the investment is worth it. Watch the full video on YouTube and Subscribe: https://www.youtube.com/watch?v=x9xGEKFTJIA&list=UUPO3uUyoXSaFWG-Ldq1mqEQ Here's my latest analysis of JPM: https://ishfaaqpeerally.teachable.com/courses/662813/lectures/15837982 Join my private investing group on Facebook for more: https://www.facebook.com/groups/IshfaaqInvesting/

0 views0 comments

Recent Posts

See All