There is a routine event that occurs after periods of large gains after no major sell-offs in stocks. Profit takers come into the mix, and if valuations and gains became too stretched then short sellers become more bold. This what it feels like is happening almost out of the blue in August in the nation’s top banking and lending stocks. Sure, politicians and regulators want to take away even more of the fees that banks get to charge. And there is continued pressure on some credit metrics in certain consumers. And the jobs economy is softening. But at what point is such a strong sell-off warranted?
When will Wall Street analysts issue reports issue “oversold” competing bank stocks? As of Monday’s close, none of the major bank analysts have reiterated their buy ratings or been strong defenders of the banking sector during this last sell-off. No “pounding the table” calls seen yet.
Oggonomics has screened the S&P 500’s banking stocks to see which ones have fallen the most since their 52-week highs. We have also looked over the asset management stocks because they all have so much overlap with each other — but companies with major earnings pressure and major implosions (such as Schwab, down over 21% from its high) have been avoided.
The Financial Select Sector SPDR (NYSEArca: XLF) is currently down 7.41% from its 52-week high. Many other banks, lenders and asset managers are down handily worse. The focus of this review was to find the worst performers with earnings and stable stories still set over the long haul. After all, when the recovery does come, the market recovery initially rewards the most punished stocks the most.
Bank Of America Corp. (NYSE: CA) rallied after earnings and the stock traded above $44 for two days. Now its drop is down 17.53% from its highs, and that is after a strong earnings report compared to some of the other banks. BofA’s dividend yield is 2.7%.
Capital One Financial Corp. (NYSE: COF) is still hoping to pull off the Discovery merger, and despite recent 52-week highs the stock is down a sharp 14.3% from its recent highs. Capital One has a dividend yield of only 1.85% that may seem weak compared to other lenders.
Citigroup Inc. (NYSE: C) remains a more difficult to decipher bank but its stock was down 17.11% from its 52-week high. It fell after earnings as the stock was already at 52-week highs, but now Citi’s dividend generates a 3.87% yield.
Keycorp (NYSE: KEY), which operates as KeyBanc, was last seen down 14.5% from its highs. Its dividend yield, perhaps artificially high due to being tied with weak regional banks last year, is now 5.8%.
Franklin Resources, Inc. (NYSE: BEN) is now down a sharp 29.2% from its 52-week high, although its high was back in December of last year. Its sell-off now puts its dividend yield at 5.7%.
Invesco Ltd. (NYSE: IVZ) was last seen down 18.11% from its 52-week high and it has a 5.4% dividend yield.
KKR & Co. Inc. (NYSE: KKR) is the one private equity manager with the worst shares of the larger asset managers. Its stock was last seen down 17.5% from its highs. It was just at $125.00 a few days ago and the stock’s dividend now screens as just 0.66%.
Principal Financial Group Inc. (NYSE: PFG) was last seen down 17.36% from its highs. Principal’s dividend yield is almost 3.9%.
T. Rowe Price Group Inc. (NASDAQ: TROW) is down by 15.63% from its 52-week highs, and while it is down from highs earlier in 2024 the stock is still down over 14% from only about two weeks ago. That’s even with a 10.8% in year over year investment advisory fees and after posting assets under management increased by $26.9 billion to $1.57 trillion. Shares of T. Rowe Price now have a dividend yield of 4.8%
Wells Fargo & Co. (NYSE: WFC) does not even have major international investment banking operations compared to the larger Bugle Bracket firms, but the stock is still down 16.67% from its 52-week highs seen in May. Wells Fargo has a dividend yield of 2.88%.
The problem with calling for strategic or strategic buys at this time, even with unrealistic calls for an emergency rate cut, is that the sell-off in banks is hardly a few trading days into the mix. Some of these stocks could slide further if the market does not cooperate. And this also assumes that no major internation geopolitical scare comes into the fold.
