Banking & Finance

Rates Are Going Higher: Why Top Financial Stocks May Be the Best Q4 Buys

JPMorgan

This stock trades at a very reasonable 11.3 times estimated 2019 earnings and also could respond well in a rising rate scenario. JPMorgan Chase & Co. (NYSE: JPM) is one of the leading global financial services firms and one of the largest banking institutions in the United States, with about $2.6 trillion in assets. The company as it is today formed through the merger of retail bank Chase Manhattan and investment bank J.P. Morgan.

The firm has many operating divisions, including investment and corporate banking, asset management, retail financial services, commercial banking, credit cards and financial transaction services. Earnings were outstanding, and the analysts remain very positive on the shares for the balance of 2018.

JPMorgan investors are paid a 1.98% dividend. The $126 Merrill Lynch price objective compares with a consensus target price of $122.17 and the most recent close at $113.08 per share.

Wells Fargo

This large cap bank remains a solid value play for 2018, though it may face the possibility of some additional fines. Wells Fargo & Co. (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.8 trillion in assets. The company provides banking, insurance, investments, mortgage and consumer and commercial finance through 8,700 locations, 12,800 ATMs, the Internet and mobile banking. It also has offices in 36 countries to support customers who conduct business in the global economy. Wells Fargo serves one in three households in the United States.

Wells Fargo has slowly, but surely, become one of the biggest mortgage lending companies in the United States, in addition to its normal banking and brokerage businesses. A continued increase in commercial real estate lending could really boost the bank’s bottom line and overall revenue. The company trades at 10.85 times estimated 2019 earnings.

Wells Fargo shareholders are paid a decent 3.07% dividend. Merrill Lynch has set its price target at $68. The consensus target is $62.28, and the stock traded at $55.99 Thursday morning.

All four of these top stocks are trading well below 52-week highs, and all boast extremely reasonable valuations. They make good sense for growth portfolios looking to add solid companies that have the potential for good moves higher over the fourth quarter and into 2019.

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