3 Financial Stocks to Buy in February 2022

With interest rate hikes on the horizon, now is the time to get into financials.

Financial stocks are about the most unsexy stocks I can think of. If you tend to trade exciting stuff like tech and growth, your eyes might glaze over at the thought of investing in banks, credit cards, or — most boring of all — insurance companies.

However, right now we have a great opportunity to potentially profit from financial stocks.

That’s because the Federal Reserve has indicated it will raise interest rates at least three times in 2022 — with the first rate hike occurring as soon as March.

In addition, the Fed plans to raise rates further in 2023.

The expected rate hikes are an attempt to curb rapidly growing inflation. 

But they’ll have another effect on the market. When rates climb, financial companies watch their profit margins grow.

So it makes sense to check out investments in financial companies now, before that happens.

Today, we’ll share three of our favorite financial stocks to invest in before the rate hikes start.

1. Bank of America Corp.

Bank of America (NYSE: BAC) is the U.S.’s second-largest bank by assets. It’s a true financial powerhouse, offering a huge menu of services to individual consumers, small and medium-sized businesses, and even large corporations.

Products range from individual checking accounts to high-dollar investment management services to business loans and everything in between.

And despite its name, Bank of America’s services are offered in roughly 35 countries around the world.

During its most recent quarter, the bank’s net income rose 28% to $7 billion. And loan and lease balances grew by $10 billion. 

Higher credit card balances only indicate a bright future when the Fed raises interest rates — and let this serve as a reminder for you to pay off your credit cards STAT!

Wall Street analysts expect Bank of America’s stock price to rise as high as $64 in the next 12 months. That would be a nearly 40% gain from today’s price, around $46 per share.

However, the stock could climb even higher in years to come, depending on moves by the Federal Reserve.

2. Visa

Visa (NYSE: V) is the largest financial stock in the world by market capitalization. It processes trillions of dollars’ worth of payments every year. And there are roughly 3.6 billion Visa credit cards in use today.

Visa’s a true multinational company — its services are available in more than 200 countries and territories.

But the company is no stodgy behemoth. Although it currently holds no cryptocurrency on its balance sheet, Visa offers crypto-linked cards. In the first quarter of the company’s fiscal 2022, Visa customers made $2.5 billion in payments with these crypto cards.

In the most recent quarter, Visa’s earnings increased 27% year-over-year, while sales jumped 14%. There was also a 21% increase in processed transactions during the quarter.

Analysts expect Visa stock to gain 20% to 35% in the next 12 months. The company recently increased its dividend payout, too, making this a great pick for income and profits.

3. Allstate Corp.

Insurance companies are another corner of the financial sector that benefit from rising interest rates. That’s because a large chunk of their revenue comes from interest-generating investments.

Allstate (NYSE: ALL) is one of the country’s biggest insurers. It has a long history of operating results that beat its competition.

However, the company’s stock went for a bit of a roller-coaster ride last year. This was due mainly to the increase in claim costs due to inflation in auto part prices. These increased costs have cut into the company’s revenues.

However, Allstate stands to gain from rising interest rates. Among the major insurers, Allstate is notoriously the most conservative in its underwriting, which makes it a less risky investment.

And Wall Street expects the company’s stock to rise by as much as 35% in the next 12 months.

Again, it’s an unsexy stock. But the money you make from it could be quite attractive indeed.

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