In 2021, as the world economies rebound from Covid-19 and businesses start a new chapter, the financial sector will act as the backbone for this economic rebound. The World Bank states that post-pandemic, the global economy will see a 5.6% annualized growth. Finance companies like Banks, Insurance companies, Fintech firms, and Crypto companies are slated to boost economic growth by providing funding and financial services to individuals and businesses. Following is a list of the top financial stocks you can add to your portfolio in 2021 for wealth creation.
1. JP Morgan Chase & Co (NYSE: JPM):
America’s largest bank should be in your portfolio with wealth management, commercial banking, and investment banking expertise. According to Reuters, that bank has carried out close to 30 strategic acquisitions of new-age businesses and assisted with major M&A deals.
Fundamental Analysis: According to Yahoo Finance, the stock has given an average return on equity (ROE) of 17% and a return on assets (ROA) of 1.4%. A P/E ratio of 13.8 gives the stock a decent valuation.
Technical Analysis: At a current price of $161, the stock is trading slightly below its 50 days moving average (DMA) and slightly above its 200 DMA. The overall technical chart shows an upward trend.
Therefore, it is the right time to buy JP Morgan Chase & Co.
2. Visa Inc. (NYSE: V):
Visa is a leading global payments company that has a presence in multiple countries and facilitates payments via credit or debit cards. According to Reuters, vaccination drives have improved consumer spending leading to more business for Visa. Another Nasdaq report states that Visa share price can see an upside of 24% in 2021 itself.
Fundamental Analysis: Yahoo Finance shows that the stock has a low beta (volatility) of 0.97 and a healthy ROE and ROA ROA of 29% and 11%, respectively. The company has a high profit margin of close to 50%.
Technical Analysis: The stock is trending sideways and undervalued, currently at $222, trading below 50 DMA and 200DMA.
However, looking at increasing consumer demand, it has an excellent long-term business outlook. You can set up a Robot-based trading algorithm in RobotMarkets to buy Visa stock once it touches its 200 DMA.
3. BlackRock (NYSE: BLK):
According to a BCG report, asset management companies can grow annually at 11%, with over $100 trillion overall industry size, as more people invest in stocks through mutual funds because of the rebound in stock markets. BlackRock is the world’s largest asset management company, with over $9 trillion of AUM. Reuters shows that BlackRock has given returns of 16% compared to the industry average of 14%.
Fundamental Analysis: The stock has an ROE and ROA of 16% and 3%, respectively, and a high-profit margin of 30%. The company has seen 15% annualized growth in revenues over the last three years.
Technical Analysis: Technicals indicate a sideways trend, but the current price of $867 is just over the 200 DMA.
Therefore, BlackRock is a good buy.
4. AON (NYSE: AON):
The insurance sector was the worst hit among all financial stocks during the pandemic due to many claims. However, a Swiss Re analysis shows that the industry will grow by 7-9% in emerging markets from 2021 onwards. That puts Aon, a leading British insurance provider of general and health insurance, at the forefront of this growth.
Fundamental Analysis: According to the Q2 press release and Yahoo Finance, the stock has a high ROE and ROA of 52% and 6%, respectively, consistently increasing positive cash flows over the last three years. The company recently bought back shares worth $240 million, reflecting high faith in the business.
Technical analysis: Technicals indicate an upward trend with the current price of $300 above both the 50 DMA and 200DMA, indicating slight over-valuation.
You can consider buying this growing insurance stock at $290.
5. S&P Global Inc. (NYSE: SPGI):
Standard and Poor Global is a leading global rating agency analyzing market data and benchmarks capital and commodity markets. Rating agencies will be in high demand from investors and financial institutions looking to grab market opportunities to advise them on credit ratings of businesses and emerging markets. S&P Global is positioned appropriately to capture this demand.
Fundamental Analysis: Yahoo Finance states that the stock has low volatility of 0.95 and a high ROE and ROA of 75% and 21%, respectively, with high positive cash flows. The stock has a P/E value of 30, which is decently valued.
Technical Analysis: The technicals show an upward trend, with the current price of 430 lying below the 50 DMA and above the 200 DMA.
Therefore, this is the right time to invest in SGPGI.
6. Coinbase (NASDAQ: COIN):
Coinbase is the market leader for Cryptocurrency Exchange platforms in the USA and listed on the stock market in April 2021. As cryptocurrency is growing at 13% annually, Coinbase, with its current user base of 56 million (Forbes) and close to $223 billion in Dogeco assets, has seen tremendous growth in revenues that doubled over a year (Yahoo Finance). Even though it is a startup, it generated a positive free cash flow of over $3 billion last year.
At a current price of $246, the stock is attractively poised due to exponential growth in crypto.
The above financial stocks provide an excellent opportunity to amass wealth in the rebound era. Do your due diligence and risk-reward analysis before investing in any stocks.