Top 10 Finance Stocks To Watch in 2021

Melisa R. H. Posted On January 7, 2021

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:

Mastercard (MA-N)

Mastercard Inc. (MA-N) — Stockchase

MA vs. V He prefers Visa, but both are good. MA gives more international exposure, so maybe a bit more growth. Defensive business models. Moving to the Financial sector of the S&P 500, so it will boost performance of that sector.

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Citi Group (C-N)

Citigroup Inc. (C-N) — Stockchase

(A Top Pick Jan 07/22, Down 30%) Has since sold shares.Company proving to be a value trap.Lost patience with company.Will invest in other companies within sector.

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Morgan Stanley (MS-N)

Morgan Stanley (MS-N) — Stockchase

Well-capitalized bank. Boast a great management business.

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Toronto Dominion (TD-T)

Toronto Dominion (TD) (TD-T) — Stockchase

One of 2 global, systemically important banks in Canada. If First Horizon closes, will become 6th largest US bank. Currently earns 16% ROE. Grown dividend at a 9% pace over the last decade. Market concerns on SCHW and overpaying for FHN are overdone. Don't get much better opportunities to buy it than now. Yield is…

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VISA (V-N)

Visa Inc. (V-N) — Stockchase

V vs. MA He prefers Visa, but both are good. MA gives more international exposure, so maybe a bit more growth. Defensive business models. Moving to the Financial sector of the S&P 500, so it will boost performance of that sector.

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Bank of Nova Scotia (BNS-T)

Bank of Nova Scotia (BNS-T) — Stockchase

All banks have been hit in the recent environment. Canadian banks are fairly well capitalized. A compelling 1.2x book. Longer term, room for a lot of capital appreciation. New management doing strategic review of capital allocation priorities, an opportunity to increase profitability. Yield is 6.2%. (Analysts’ price target is $72.72)

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Intact Financial (IFC-T)

Intact Financial (IFC-T) — Stockchase

Recently bought another PC insurer (see top picks) for its better valuation and wider international exposure, but Intact offers good exposure to this sector.

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Royal Bank (RY-T)

Royal Bank (RY-T) — Stockchase

Dividend yield is pretty good at 4.1%, and it's grown at an 8% compound pace over the last 10 years. Leading personal and commercial banking franchise in Canada. Big presence in US. Should benefit from skittish deposits in Silicon Valley. Top 10 global e-capital markets business. 12% compounded shareholder return over a decade, sees more…

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Canadian Imperial Bank of Commerce(CM-T)

Canadian Imperial Bank of Commerce (CIBC) (CM-T) — Stockchase

Still likes it. Very discounted with what's happening in the financial world, especially in the US. An opportunity for long-term investors, around 8x earnings, yield 5.9%.

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Bank of America (BAC-N)

Bank of America (BAC-N) — Stockchase

As opposed to 2008, big money-centre banks now have a chance to be the good guys. Liquidity problems will be the friend of these banks. Pristine balance sheet, excess capital, no depository risk. US government has de facto guaranteed bank deposits. Valuation metrics are all at 6 to 7-year lows (excepting the drop and recovery…

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