In the investment world, what do we mean when discussing the Financial Sector? This sector is comprised mostly of companies that engage in the activities of providing loans, savings services, insurance, payments, and money management. In August of 2020 the World Bank published a report covering the financial industry throughout the crises. The countercyclical lending role that banks are expected to play by providing liquidity to the market have put banking systems under significant stress. Bank stocks have been underperforming their domestic markets and other non-bank financial firms, providing investors with a total return of -4.6% compared to the Russell 1000’s total return of 20.6% over the past 12 months, as of December, 2020. Policy intervention by legislatures and central banks has somewhat helped in stabilizing the situation, but this is not true for all banks or in all circumstances. Let us look at some of the stocks that stand out in the sector.
Here are some of the industry’s Top Stocks for 2020\2021:
Jefferies Financial Group Inc. – (JEF)
Jefferies Financial Group is a global diversified financial services company focused on investment banking and capital markets, asset management, and direct investing.
The stock returned 34.28% in the last 3 months, almost doubling from its March lows.
JPMorgan Chase – (JPM)
JP Morgan Chase is the largest U.S. bank, and the largest company of any kind in the financial sector. To make the case against JP Morgan Chase stock as an investment is difficult. The bank has been consistently posting some of the highest profitability metrics in the industry and has far-reaching, diversified operations in both consumer and investment banking.
The stock returned 28.5% in the last 3 months and it is up nearly 50% since its March lows.
Goldman Sachs – (GS)
The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and individuals. Goldman was able to stay above the fray in 2020, seeing record profits as its smaller loan book makes it less sensitive to low rates and credit defaults.
The stock returned 31% in the last 3 months and it almost doubled in value since its March lows.
MSCI, Inc – (MSCI)
It is an investment research firm that provides stock indexes, portfolio risk and performance analytics, and governance tools to institutional investors and hedge funds.
The stock returned 67% in the last 12 months and has doubled from its March lows.
PayPal Holdings Inc. – (PYPL)
PayPal Holdings, Inc. is an American company operating an online payments system in majority of countries that supports online money transfers and serves as an electronic alternative to traditional paper methods like checks and money orders.
The stock returned 113% in the last 12 months and has almost tripled since the March lows.