2020 saw a year of uncertainty and financial hardship for many households across the globe. It looks to be that the worst fears were avoided and banks are seeing a modest recovery. Low interest rates remain and overhang for the banking sector however. According to experts, the balance sheets and liquidity of financial companies are generally strong and 2021 should see better results.
The coronavirus also accelerated already established trends of moving away from physical cash to contactless and online payment methods. This trend is expected to continue to gain steam into 2021.
Here are the top 10 Finance stocks to watch in 2021:
PayPal may be a threat, but he's holding onto MA because cross-border travel in the coming reopening will boost their business. They report Thursday.
Citi Group (C-N)
Financials are part of the recovery script. We are seeing a steeper yield curve and slightly higher rates. Value leads over growth after a recession. Q3 was solid but there was litigation that overshadowed it. Investors can look forward to this changing soon. 60% EPS growth next year. (Analysts’ price target is $66.98)
Morgan Stanley (MS-N)
Turned from institutional fixed income to wealth management. Acquisitive. Inexpensive. Well managed. Technically, stock price looks very attractive. Yield is 2.19%. (Analysts’ price target is $64.90)
Toronto Dominion (TD-T)
Canadian banks are under huge pressure with rates so low. Possible that rates go negative next year, and that's a tax on fixed income. One of Canada's strongest banks, along with Royal. They'll figure out a way to make money, no matter what the environment.
Owns Visa. If you look back to when it first became public, it has been a solid upward movement, bar the financial crisis. Effectively, it is the mechanism to fund purchases during Covid. Move away from cash will continue and it should be a structural grower. Prefers Visa, especially with Visa Europe that was incorporated…
Bank of Nova Scotia (BNS-T)
He owns many Canadian banks. Pays a higher dividend than peers and is exposed to Latin America, which offers growth. The Canadian banking sector is undervalued and offers dividend growth. Banks are well capitalized and in great shape.
Intact Financial (IFC-T)
A quality name to own. Likes the stock. Modelling 9.3% growth. It is trading at 14x 2022 so it is quite expensive price to book. They did an interesting deal recently. If you look at Canadian financials they are very cheap by PE ratio. Would buy it around $136.
Royal Bank (RY-T)
(A Top Pick Jan 14/20, Up 8%) She continues to like it. She likes them as a group and thinks their earnings will improve this year. The situation was not as dire as the situation was when they made their reserves last year. This puts them in a god position in terms of provisioning. Canadian…
Canadian Imperial Bank of Commerce(CM-T)
The banks lagged this past year, but their earnings delivered as capital markets delivered. Interest rates have hurt this year, but should tick higher in the future. The banks hold excess capital. They've more than covered loan-loss provisions. They will buy back shares again and do acquisitions. He now likes Canadian banks for the first…
Bank of America (BAC-N)
It pulled back 3% Friday, but doesn't expect it to much after it reports next week. US banks need to deliver a blow-out to impress investors. A simple beat isn't enough.