Pro Picks: 4 Hefty Bank Plays as the Fed Pauses Rate Hikes

By Investing.com (Thomas Monteiro)Stock MarketsJun 16, 2023 05:05PM ET

www.investing.com/analysis/pro-picks-4-hefty-bank-plays-as-the-fed-pauses-rate-hikes-200639086

Pro Picks: 4 Hefty Bank Plays as the Fed Pauses Rate Hikes

By Investing.com (Thomas Monteiro) | Jun 16, 2023 05:05PM ET

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US500

+0.38%

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PNC

+1.31%

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The Federal Reserve has finally paused its aggressive campaign to raise interest rates after 10 straight hikes since March of last year. Still, it anticipates two more bumps before the year is out, so we’ll be in a high-interest-rate environment for the foreseeable future. While many sectors are hurt by this kind of backdrop, banks tend to flourish, in large part because it means they earn more from loans than they need to pay out on deposits.

This week’s VIP Pro Picks calls out four bank stocks that also sport exceptional InvestingPro financial health rankings and are trading well under fair value. Among those that rise to the top is regional bank PNC Financial (NYSE:PNC).

Like all Pro Picks, PNC and the rest of this week’s selections have all earned a InvestingPro financial health score of 2.75 or more out of 5, which for the last 7 years has indicated outperformance vs. the S&P 500. That score indicates firm financials: top-notch earnings, cash flow, and growth vs. peers.

PNC was caught in the larger regional-bank pullback earlier this year, and despite a partial recovery, shares are still off nearly 20% year to date. But Citi analysts upgraded the stock to Buy after that slide and called its management team “one of the best” among large regional banks, citing the bank’s “clean asset quality” and “strong deposit base.”

InvestingPro’s metrics align well with those sentiments: PNC rocks a solid InvestingPro financial health score of 3.02 thanks in large part to a stalwart bottom line. The bank serves up excellent earnings quality, with free cash flow tending to surpass net income, and it has a strong revenue trend that outranks virtually all its peers. With all that, InvestingPro’s fair value calculations say the stock should rise nearly 30% from current levels.

And you’ll get paid to wait for that upside: PNC’s dividend has been going strong for 52 years, and its current payout is a generous 4.7%.

Want to see the full list of this month's Pro Picks poised to beat the market? Start a 7-day free trial to unlock must-have insights and data. And while you’re here, dig into InvestingPro’s wealth of tools and screeners to begin building a lucrative portfolio.

If you're already an InvestingPro subscriber, this week's full Pro Picks list is available here.

Data as of June 15, 2023.

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Central Banks

Interest Rates

Next Meeting

FED

5.50%

Dec 13, 2023

ECB

4.50%

Dec 14, 2023

BOE

5.25%

Dec 14, 2023

SNB

1.75%

Dec 14, 2023

RBA

4.35%

Dec 05, 2023

BOC

5.00%

Dec 06, 2023

RBNZ

5.50%

Feb 28, 2024

BOJ

-0.10%

Dec 19, 2023

CBR

15.00%

Dec 15, 2023

RBI

6.50%

Dec 08, 2023

PBOC

3.45%

BCB

12.25%

Dec 13, 2023

US 30	35,917.5	-33.4	-0.09%
US 500	4,557.8	-10.0	-0.22%
Dow Jones	35,950.89	+520.47	+1.47%
S&P 500	4,567.80	+17.22	+0.38%
Nasdaq	14,226.22	-32.27	-0.23%
S&P 500 VIX	12.93	+0.01	+0.08%
Dollar Index	103.512	+0.084	+0.08%

Crude Oil WTI	75.97	+0.01	+0.01%
Brent Oil	80.75	-0.11	-0.14%
Natural Gas	2.774	-0.028	-1.00%
Gold	2,036.80	-1.30	-0.06%
Silver	25.220	-0.073	-0.29%
Copper	3.8788	+0.0283	+0.73%
US Soybeans	1,330.50	-12.25	-0.91%

U.S. 10Y	4.337	-0.012	-0.28%
U.S. 30Y	4.500	-0.011	-0.25%
U.S. 5Y	4.277	-0.021	-0.50%
U.S. 3M	5.398	-0.005	-0.09%
US 10Y T-Note	109.61	+0.14	+0.13%
Euro Bund	132.51	+0.16	+0.12%
10-2 Yield Spread	-36.64	+2.20	+-5.66%

Apple	189.91	+0.54	+0.29%
Alphabet A	132.45	-2.54	-1.88%
Tesla	239.79	-4.35	-1.78%
Amazon.com	146.05	-0.27	-0.18%
Netflix	473.97	-3.22	-0.67%
Meta Platforms	327.15	-5.05	-1.52%
Bank of America	30.48	+0.41	+1.36%

Pro Picks: 4 Hefty Bank Plays as the Fed Pauses Rate Hikes

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