There are some promising finance stocks for investors to pick up in March this year. I think that falling interest rates, which are predicted to happen throughout 2024 and 2025, will be a good thing for these companies. This could stimulate the growth of mortgages and breathe new life into the economy. Then, this could lead to more investing and a more liquid credit market.
Several well-positioned finance stocks stand out as compelling investment opportunities in this environment. Banks with diverse revenue streams, robust capital buffers, and a track record of prudent risk management are likely to navigate the changing interest rate landscape successfully.
Meanwhile, credit card stocks and related lenders could also see an uptick in demand. This is especially true as credit card debt reached a new high this month of 1.13 trillion in the United States. All of this is a sign of robust demand.
For investors looking to pick up shares of some finance stocks this month, here are three companies to consider closely.
Visa (V)
Visa (NYSE:V) demonstrated robust net revenue growth and has continued this positive trajectory into Q1 of FY 2024. The company reported a 9% year-over-year increase in net revenue for Q1 FY 2024. This occured alongside significant activities in stock buybacks and dividends. All of this resulted in returning 86% of its free cash flow to shareholders in the last 12 months.
For FY2024, Visa has projected low double-digit growth in net revenues, buoyed by continued momentum in cross-border transactions. Furthermore, the company is expected to grow its EPS by 13% this fiscal year. All of this is occuring with similar growth anticipated over the next three years.
Trading at just 27 times forward earnings, Visa looks well-positioned to capitalize on the growth trends of rising credit card debt as well as a fall in interest rates. It’s one of my best picks for investors looking to scoop up shares of an attractive financial stock this year and for the foreseeable future.
JPMorgan (JPM)
For 2023, JPMorgan (NYSE:JPM) was projected to earn $16.79 per share, showcasing strong performance throughout the year. However, the outlook for 2024 forecasts a slight decrease in earnings per share to $15.38. This is down from the previous year’s expectations, but still significantly up from $12.90 earned in 2022.
JPM’s Commercial Banking segment reported revenue of $4.02 billion for Q4. This marked a significant year-over-year increase from $3.40 billion in Q4 2022. Net income for the segment also saw a robust increase.
JPM’s growth in the commercial space gives investors an additional growth avenue. Visa targets primarily the consumer end of the market. I think that JPM will continue to be a strong performer throughout the year. This is supported with the stock price up just over 10% year-to-date.
The oft-speculated recession throughout last year did not occur. I feel this kept the valuations of banks with a strong commercial focus like JPM suppressed. Since that specter of fear has been lifted, these shares could rally strongly in the face of positive consumer sentiment.
Citigroup (C)
Citigroup (NYSE:C) is making strides in restructuring its operations to improve its cost-to-income ratio. It projects a 4-5% Compound Annual Growth Rate (CAGR) in revenue going into 2024 and beyond, reflecting efforts to streamline operations and improve return on equity (ROE).
The firm’s restructuring is one of the main reasons I chose Citi as a potential outperformer for the rest of the year. The bank also plans to cut around 20,000 jobs over the next two years as part of its reorganization, aiming for substantial cost savings.
When large organizations like Citi grow, it’s common for bureaucracy to increase and low to no-value positions cluttering up its payroll, draining valuable resources. When these jobs are cut, it often follows that the company’s performance increases in subsequent quarters.
The reasoning is simple: smaller businesses with fewer moving parts and personnel are easier to manage, have more efficient operations, and is easier for management to steer into new directions to unlock value for shareholders.
Citi has also been buoyed by some promising near-term results last quarter. Namely, banking revenues saw a 22% increase, driven by Investment Banking fees and lower losses on loan hedges, despite lower Corporate Lending revenue. While U.S. personal banking revenues grew by 12%, with branded cards and retail services contributing significantly to the increase.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.