Ranking The Major Financial Stocks

2008 was not a good year to have owned financial stocks. In 2008, the eleven financial stocks profiled in this article saw their stock prices fall over 52% on average. Six of these financials stocks fell over 60% last year. And only three stocks (JP Morgan, US Bancorp and Wells Fargo) actually outperformed the Dow Jones industrial average.

 

Of course everyone is asking whether or not the markets have hit bottom. US Bancorp Chairman and Chief Executive Richard Davis said today that he believe bank stocks are undervalued by 33 – 50%. Sideline investors have watched financial stocks get hammered over the last 18 months and are now wondering if it’s the time to buy.

 

Conventional wisdom will tell you that it is impossible to time the markets and we certainly believe that holds true in 2009. We also believe that there remain significant challenges for our economy and the financial sector in particular.

 

However, for those brave investors that do want to buy financial stocks right now, here is our ranking of the major financial stocks.

 

1.     JP Morgan Chase (JPM: 38.16 +1.11%)

JPM is blessed with one of the best management teams in the industry.

 

2.     Goldman Sachs (GS: 139.78 +0.03%)

Warren Buffet’s $5 billion investment in GS at $115 per share is looking like a smarter investment all the time.

 

3.     Wells Fargo (WFC: 25.10 +1.78%)

In 2008, Well Fargo’s stock fell only 2.4%.

 

4.     Morgan Stanley (MS: 25.68 +1.06%)

Since the beginning of the year, the markets have pushed MS up over 66%.

 

5.     U.S. Bancorp (USB: 22.12 +1.42%)

US Bancorp fell only 21% last year and continues to post quarterly profits.

 

6.     American Express (AXP: 40.88 -0.46%)

Should be better positioned than Visa to withstand the coming credit card disaster.

 

7.     Charles Schwab (SCHW: 13.77 +1.70%)

If the recent market gains prove to only be a bear market rally, it may take a while before individual investors are willing to re-enter the markets.

 

8.     Visa (V: 71.98 +2.06%)

Credit card delinquencies could still be a major issue in the coming months. 

 

9.     Bank of America (BAC: 13.28 +0.55%)

CEO Kenneth Lewis is likely on his way out of town and stress test results show that BAC will need to increase their capital reserves by $34 billion.

 

10. Citigroup (C: 3.88 +0.84%)

There still remains concerns over Citi’s balance sheet and the potential for future write-downs.

 

11. AIG (AIG: 35.92 +0.73%)

Despite billions in bailout assistance, AIG continues to post billions in losses each quarter.