Large-cap financials such as JPMorgan Chase (NYSE: JPM), Bank of America (NYSE: BAC) and Wells Fargo (NYSE: WFC) rose along with the broader market early this week, while some smaller banking stocks, such as First Citizens Bancshares (NASDAQ: FCNCA)have outpaced the wider sector.
First Citizens, like the entire industry, has seen net interest income and margins increase as interest rates rise. This usually happens in an environment of rising rates.
Regional banks may remain under the radar as investment opportunities. Unless you live in an area where one of these banks operates, they are not obvious candidates to fall under the famous Peter Lynch “buy what you know” category of investment ideas. But a screener, like the one you find on MarketBeat.comcan help you identify some not immediately obvious names.
First Citizens is a North Carolina-based regional bank with 529 branches and offices in 19 states and Washington, DC. It has a market cap of $13.48 billion, making it the largest company in the southeastern/regional banking subsector.
The stock not only outperformed the financial sector as a whole, but also its regional banking peers. Shares are up 5.78% in the past month and 25.47% in the past three months.
MarketBeat analyst data for the stock shows a “moderate buy” rating with a price target of $925, a potential advantage of 9.67%.
The stock broke out of a cup with a handle on Sept. 12, but snapped with broader market volatility. It failed to sustain the breakout and closed the week ending September 30 below the 50-day moving average, but regained that price line. It is currently trading above the 10 and 21 day moving averages.
Company reports third quarter profit on Oct. 27, while Wall Street posted net income of $19.77 per share on revenue of $1.02 billion. That would be an increase of 62% and 110% respectively.
For the full year, analysts expect the company to earn $69.33 per share, up 29% from 2021. Next year, that will rise another 31% to $91.05 per share.
Other banks will, of course, benefit from rising interest rates, and some are already seeing share price gains on the back of strong fundamentals.
Currently based in Pennsylvania Fulton Financial (NASDAQ: FULT) also outperforms financials as a whole. The stock is up 5.94% in the past month and 15.43% in the past three months.
Fulton has a market cap of $2,635 billion, placing it either at the top of the small-cap categorization or at the bottom of mid-cap.
It currently forms a cup-with-handle pattern, with a potential buy point of over $17.67. It has been languishing below that point since mid-August.
According to MarketBeat earnings data on the stockFulton surpassed earnings statements in five of the past six quarters. In the quarter ended December 2021, the company achieved a return of $0.37 per share.
Fulton will report its third quarter on October 18, after the closing bell. Analysts expect the company to earn $0.44 per share on revenue of $198.64 million. Both would be lower than a year earlier, but often a positive outlook can offset declines in sales or earnings and send the stock higher.
Fulton is categorized as a super-regional bank, meaning it has significant operations in several states.
Larger, more well-known super-regional banks include: PNC (NYSE: PNC). This Pittsburgh-based bank has a large presence in the Northeast, with more than 2,600 branches. The stock has been in a correction since January but has found a bottom between $146 and $147 so far.
Another super-rational large-cap is American Bancorp (NYSE: USB), that’s a drop of 24.37% year-to-date. It also corrects since January. Unlike PNC, it is not clear that it has found its price bottom yet.
It’s not always the biggest, most famous names that offer the best opportunities at any given time. While it’s true that the traditional advice to “buy low, sell high” in any market cycle is correct, it’s not necessarily best to identify the most beaten-up stocks when a stock that’s outperforming the broader market can offer more opportunities.