Back to top

5 Large-Cap Financial Stocks That Crushed the Market in 2017

Read MoreHide Full Article

With some of President Trump’s promises on the verge of fulfillment, the finance sector has been in the spotlight this year. A rising rate environment, progress on tax reforms and improving economic backdrop led to the S&P 500 and Dow Jones Industrial Average soaring 20.7% and 24%, respectively, so far this year.

In the first half of 2017, financial stocks underperformed as investors began to get weary of the slow progress on Trump’s promised reforms, which ultimately led to low volatility in the markets.

However, since September 2017, the stock market rebounded, crushing expectations. The Federal Reserve’s move to trim its balance sheet instilled confidence in the market.

Also, positive comments by the new Fed Chair, Jerome Powell, on deregulation and his focus on rising interest rates led rally for financial stocks. The central bank hiked interest rates recently for the fifth time since the crisis and plans three more rate hikes in 2018. Also, it projects better economic growth rate in 2018.

The market is gaining on expectations of higher corporate earnings next year with the implementation of the tax overhaul.

Some financial stocks triumphed in 2017 by outperforming the S&P 500’s rally on the back of improving economic factors, higher certainty and strong fundamentals. These stocks still have plenty of upside left.

5 Winning Stocks

In order to save investors from the time-taking process of identifying the key winners that crushed the market and are likely to gain further, we have created a three-faceted screen using the Zacks Stock Screener.

At first, we looked for stocks that beat the S&P 500 so far this year and have projected annualized earnings per share growth rate (for the next three to five years) of more than 8%.

Next, we considered companies that have market capitalization of more than $5 billion, as they are safer to invest in.

Finally, we have picked stocks that carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Here are stocks that made it through the screen:

MGIC Investment Corporation (MTG - Free Report) ): Based in Milwaukee, WI, the company offers primary insurance to cushion lenders against non-payment of individual loans and expands home ownership opportunities by enabling people to purchase homes with smaller down payments.

Shares of MGIC Investment have gained 44.4% year to date, outperforming the 20.3% rally of the S&P 500.

Zacks Rank: 2
Market Cap: $5.5 billion
Projected EPS Growth (three to five years): 8.5%

(Looking for the Best Stocks for 2018? Be among the first to see our Top Ten Stocks for 2018 portfolio here.)

Moody's Corporation (MCO - Free Report) ): Moody’s is a leading provider of credit ratings, research, data & analytical tools, software solutions & related risk management services, quantitative credit assessment services and credit process software to banks and other financial institutions.

Shares of the company have gained 59.3% so far this year.

Zacks Rank: 2
Market Cap: $28.6 billion
Projected EPS Growth (three to five years): 9.5%

American Express Company (AXP - Free Report) ): New York-based American Express Company is a diversified financial services company, offering charge and credit payment card products, and travel-related services worldwide.

Shares of the company have gained 33.8% so far this year.

Zacks Rank: 2
Market Cap: $84.3 billion
Projected EPS Growth (three to five years): 10.3%

E*TRADE Financial Corporation (ETFC - Free Report) ): E*TRADE offers various brokerage products and services including automated order placement and execution of the U.S. and international equities, currencies, futures, options, exchange-traded funds, mutual funds and bonds.

Shares of the company have gained 43.1% so far this year.

Zacks Rank: 2
Market Cap: $13 billion
Projected EPS Growth (three to five years): 12.5%

Raymond James Financial (RJF - Free Report) ): The company undertakes underwriting, distribution, trading, and brokerage of equity and debt securities, and the sale of mutual funds and other investment products.

Shares of the company have gained 28% so far this year.

Zacks Rank: 2
Market Cap: $12.5 billion
Projected EPS Growth (three to five years): 17%

5 Medical Stocks to Buy Now

Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia and other conditions.

New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.

Click here to see the 5 stocks >>



More from Zacks Analyst Blog

You May Like

Published in