The financial sector has made a strong recovery this year with the rebound in economic activities and higher-than-usual capital market activities. And since the Fed is expected to raise interest rates in the near term, financial stocks should benefit further soon. Hence, we think this might be the right time to scoop up fundamentally sound financial stocks of Capital One Financial (COF), Flagstar Bancorp (NYSE:FBC), and Capital Bancorp (NASDAQ:CBNK). So, let’s discuss these names.The finance and banking sector was hard hit last year due to the COVID-19 pandemic. The sector has rebounded strongly this year, with the economic recovery driving a rise in banking transactions and higher-than-usual capital market activities. The sector has grown to account for one-third of Fortune’s latest 100 Fastest-Growing Companies List, outpacing the technology sector.
The Fed’s signal that it will raise benchmark interest rates as soon as 2022 should further drive the financial sector’s growth. With the consumer price index rising 4% year-over-year, the odds of an interest rate hike are good.
Investors’ interest in the finance sector is evidenced by the Financial Select Sector SPDR Fund ETF’s (XLF) 37.1% year-to-date gains, versus the broader SPDR S&P 500 ETF Trust’s (SPY) 22.6% returns. Hence, we think it could be wise to bet on financial stocks possessing solid fundamentals—Capital One Financial Corporation (NYSE:COF), Flagstar Bancorp, Inc. (FBC), and Capital Bancorp, Inc. (CBNK).