4 U.S. Banks on Double-Digit Discounts

These stocks are trading at a sizeable discount to their intrinsic values offering some margin of safety

Vikram Barhat 4 November, 2020 | 1:48AM

Banks

As the markets react to the U.S. elections, one of the industries watching the elections most keenly and closely is banking. The election results have clear implications for the U.S. banking sector, particularly with regards to regulatory changes, economic policies, the real estate market, and the pandemic management.

2019 was a bumper year for the sector, with the Morningstar US Financial Services index clocking a 30% return, but 2020 saw a reversal of fortunes. The financial services sector was one of the hardest hit this year, down nearly 18% for the year to date, as of Oct 29. For the same period, the Dow Jones U.S. Banks Index plummeted a staggering 37%, relative to the 1.25% gains for the S&P 500 index.

This has created some attractive investment opportunities for opportunistic long-term investors with some risk appetite. These U.S. bank stocks are trading at a sizeable discount to their intrinsic values offering some margin of safety. While not immune from economic and systemic disruptions caused by cataclysmic events of global scale, these are well-capitalized institutions able to withstand the financial fallout of the pandemic, a slow and protracted economic recovery, and the resultant low interest-rate environment.

Wells Fargo & Co

 

Ticker

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Citigroup Inc58.62 USD3.61
Goldman Sachs Group Inc239.58 USD1.75
U.S. Bancorp45.37 USD0.89
Wells Fargo & Co29.55 USD1.34

About Author

Vikram Barhat

Vikram Barhat  Vikram Barhat is a Toronto-based financial writer specializing in investing, stock markets, personal finance and other areas of the financial services industry. He also writes for CNBC, BBC, The Globe and Mail, and Toronto Star.

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