The three best bank stocks to buy now include a leading financier of the technology industry, a global investment bank and a rapidly growing regional bank at the forefront of financial technology (fintech) innovation. Bank stocks are a favorite of legenda
The three best bank stocks to buy now include a leading financier of the technology industry, a global investment bank and a rapidly growing regional bank at the forefront of financial technology (fintech) innovation.
Bank stocks are a favorite of legendary investor Warren Buffett due to their importance to society, simple business models and excellent long-term return profiles. However, an investment in this sector brings unique characteristics, benefits and risks due to their susceptibility to global market trends and fiscal and monetary policies.
The global banking industry has greatly benefited from the influx of cash into the world economy brought about by government policies designed to provide a fiscal stimulus and to combat the COVID-19 pandemic. Those policies, combined with rising inflation rates in countries like the United States, have helped spur capital markets and investment activity. The new capital has allowed many banks to generate record-breaking returns.
As a result, bank stocks have been some of the best-performing investments over the past 12 months and should continue to be as financing demand and activity increases alongside the global economic recovery.
Valuation Metrics of the 3 Best Bank Stocks to Buy Now
Three critical metrics to keep in mind when evaluating bank stocks are: return on equity (ROE), return on assets (ROA) and the (share) price-to-book (P/B) ratio. ROE measures a bank’s profit as a percentage of the company’s shareholders’ equity. ROA, meanwhile, gauges the profitability of the institution compared to the assets the firm has on its balance sheet. The higher the ROE and ROA, the better. Investors generally prefer an ROE of at least 10% and a ROA of 1% or greater.
Last, but not least, is a bank’s P/B ratio. Similar to the (share) price-to-earnings (P/E) ratio, P/B details to investors how expensive or cheap the stock is by comparing the share price to the firm’s net value of assets. Generally, a lower P/B ratio means a better deal for investors.
SVB Financial Group (NASDAQ:SIVB), founded in 1983, is a banking and financial holding company headquartered in Santa Clara, California, with more than $142 billion in total assets. Its principal subsidiary is Silicon Valley Bank which specializes in providing financing and advisory services for technology firms. The company possesses a market capitalization of $30.5 billion and offers commercial banking, investment, private banking and asset management services across its four core business segments: SVB Capital, Global Commercial Bank, SVB Private Bank and SVB Leerink.
SIVB has consistently generated some of the best metrics across the entire banking industry. The company boasts a compound annual growth rate (CAGR) of 22.0% for revenue over the past five years and an earnings per share (EPS) CAGR of 28.4% over the same period, resulting in a five-year return rate of 443.5%.
COVID-19 has provided more of a boost to this Silicon Valley Bank than nearly any other financial institution. SVB Financial Group’s unique position as the pre-eminent financier in the technology space has allowed it to capitalize on the explosion in technology demand during the pandemic, with the company posting record-setting revenue and profit gains in first-quarter 2021. Revenue climbed by 71.3% and net income by 294.9%, compared to first-quarter 2020 figures, leading to a return rate of 175.5% over the past year and growing EPS by a further 61.1% over the same period.Those results are well above industry and S&P 500 averages.
SIVB did not only see its income statement figures grow. Its total assets on the balance sheet increased 23.2%, including a 128.9% surge in cash, over the trailing 12 months. What makes SVB Financial’s metrics even more impressive is that it has maintained a 1.1% ROA and increased its ROE to 16.1% from 14.5% in Q1 2021, compared to the end of fiscal year 2020. It can often be challenging to maintain ROA and ROE ratios after a sudden jump in assets or shareholders’ equity as it takes time to allocate the new capital to maintain relative earnings, much less increase relative returns.
The company’s consistent ability to comfortably outperform the market has caused SIVB’s share price to surge by 429.3% over the last five years and by 153.3% over the past 12 months. The stock’s one-year growth alongside a 50-day moving average is displayed below.
The one downside to SIVB is its relatively high P/B and P/E ratios of 3.4 and 18.1, above industry averages of 0.9 and 13.8. However, the slight premium in share price seems well worth it for a stock with as much upside and growth as SVB Financial. Stock Rover assigned a value rating of 84 to SIVB, above the industry average of 78, showing the stock still is undervalued.
COVID-19 pandemic-related technology innovation gains are expected, according to an October 2020 McKinsey & Co. report, with companies in Silicon Valley where the bank does business playing a key part in those advances. Artificial intelligence alone is expected to add $15.7 trillion to the global economy by 2030. Few financial institutions are better positioned than SVB Financial Group to embrace changing tailwinds in the coming decades.
A discounted cash flow (DCF) analysis, using Stock Rover, values the stock at $575.50, 4.7% higher than its latest closing price of $549.67. With analysts projecting a 24.0% growth in sales for 2021, SIVB received a “Buy” recommendation from Stock Rover and a place among our three best bank stocks to buy now.
Goldman Sachs Group Inc (NYSE:GS) is a leading international investment bank and financial holding company based in New York City with business segments in global markets, asset management, consumer banking, wealth management and investment banking. Since being founded in 1869, Goldman Sachs has been seen as the pinnacle of high finance and currently presides over $2.1 trillion in assets under supervision and a market capitalization of $128 billion.
Like many financial sectors, Wall Street banks have seen a boom in business as the global economy continues its recovery from the COVID-19 pandemic. However, Wall Street’s recovery has outpaced all expectations and outperformed most other related industries. If anything, COVID-19 has proved to be a blessing in disguise for Goldman Sachs and its competitors.
The Federal Reserve’s (Fed) attempt to prop up the United States economy by slashing interest rates, instigating corporate bond buyback programs and printing money has flooded the financial markets with trillions of dollars, bolstering the stock market and encouraging new bond issuances, equity offerings, mortgage lendings and merger and acquisition deals. Those financing activities are the bread and butter of investment banks like Goldman Sachs. The Fed’s actions combined with new government stimulus packages have proven to be so beneficial that it has led to an average sales growth rate of 56.8% and an average one-year return rate of 70.9% within the capital markets industry over the past year.
Goldman Sachs has managed to beat industry figures, with its stock price soaring by 93.9% over the past year on the backs of a 62.2% jump in revenue and a return rate of 98.4% over the trailing 12 months. The company has seen its EPS jump from $21.03 in 2019 to $24.74 in 2020 and is expected to shatter last year’s figures with an astounding EPS of $18.60 in Q1 2021 alone. GS’s stock price over the past year is shown below alongside a 50-day moving average.
However, the stock’s climb is likely not over yet as Wall Street companies, from JP Morgan Chase to Wells Fargo, reported bullish economic and industry outlooks in April 2021. With a near-record level of savings in the U.S. economy, gross private savings rose to more than $7.8 trillion in Q1 2021. Many analysts predict a significant boom in consumer spending in the coming months, auguring well for financial institutions, especially Wall Street banks, with Goldman Sachs projected to experience a 12.1% sales growth in 2021.
The company also excels in bank valuation metrics, possessing stellar ROA and ROE ratios of 1.2% and 12.9%, displaying a consistent capability to generate returns above competitors. GS’s P/E and P/B ratios of 9.4 and 1.5 are also well below the industry averages of 16.3 and 2.9, designating the company’s share price as a bargain relative to companies with similar financials.
A discounted cash flow (DCF) analysis, using Stock Rover, values the stock at $391.57, 5.3% higher than its latest closing price of $371.78, earning GS a “Buy” recommendation from Stock Rover and a place among our three best bank stocks to buy now.
Signature Bank (NASDAQ:SBNY) is a New York-based regional commercial bank specializing in providing commercial lending, wealth management and asset management services through its 37 private client offices across New York, California, Connecticut and North Carolina. Signature Bank is the youngest and smallest bank on this list, being founded in 2001 and possessing a market capitalization of just over $14 billion. The company currently manages more than $85 billion in assets.
Signature has seen a meteoric rise over the past 10 years, with one of the best-annualized return rates in the banking industry at 17.2%. The company’s returns also have gotten better over time, with a one-year return rate of 146.8% and a three-year return rate of 106.4%. However, the best is yet to come for SBNY.
As a relatively young company, Signature can be more flexible and proactive in its business plan than more established players in the industry, with the company pursuing an ever-increasing focus on technology. In 2019, SBNY launched its revolutionary real-time digital payments platform, Signet, designed for cryptocurrency, allowing clients to send, receive and process transactions 24/7, 365 days a year.
The platform has been immensely successful and, combined with recent excess liquidity in the economy, has allowed the bank to experience a $37 billion jump in total deposits since Signet’s launch in Q1 2019, rising from $36 billion to nearly $74 billion, as users are encouraged to maintain account balances of $250,000. With the global cryptocurrency market capitalization projected to skyrocket as high as $11 trillion by 2026, Signature Bank seems set to produce a windfall of new revenue from Signet in the foreseeable future.
Although still higher than the regional banking industry averages of 8.4% and 0.6%, the bank’s most significant point of concern is its relatively low ROE and ROA ratios of 9.2% and 0.7%. However, the good news for investors is that the low ratios are not due to bad investments but are instead a rare instance of being signs of a company’s rapid growth over the past two years.
The influx of deposits, which has increased by $10.5 billion in Q1 2021 alone, has led to a significant decrease in investments and, subsequently, returns relative to the company’s assets and equity. SBNY has already begun to take steps in addressing its new capital by issuing and purchasing more than $28 billion in new loans, mortgages, leases, securities and other investments since Q1 2020, leading to an increase in revenue by 22.1% over the past year. Signature Bank executives also anticipate an additional $2 billion to $4 billion in new loan issuances and security investments each quarter for the near future, leading analysts to project an 18.5% jump in revenue for 2021 and a bump of 16.9% for 2022.
SBNY’s growth and upside potential have caused its share price to increase by 136.5% over the past year and by 84.8% so far this year. The change in share price over the past year and a 50-day moving average line are charted below.
A discounted cash flow (DCF) analysis, using Stock Rover, values the stock at $267.59, 11.6% higher than its latest closing price of $239.78, earning SBNY a “Strong Buy” recommendation from Stock Rover and a place among our three best bankl stocks to buy now.
Pharma industry reputation remains steady at a ‘new normal’ after Covid, Harris Poll finds
The pharma industry is hanging on to reputation gains notched during the Covid-19 pandemic. Positive perception of the pharma industry is steady at 45%…
The pharma industry is hanging on to reputation gains notched during the Covid-19 pandemic. Positive perception of the pharma industry is steady at 45% of US respondents in 2023, according to the latest Harris Poll data. That’s exactly the same as the previous year.
Pharma’s highest point was in February 2021 — as Covid vaccines began to roll out — with a 62% positive US perception, and helping the industry land at an average 55% positive sentiment at the end of the year in Harris’ 2021 annual assessment of industries. The pharma industry’s reputation hit its most recent low at 32% in 2019, but it had hovered around 30% for more than a decade prior.
Rob Jekielek
“Pharma has sustained a lot of the gains, now basically one and half times higher than pre-Covid,” said Harris Poll managing director Rob Jekielek. “There is a question mark around how sustained it will be, but right now it feels like a new normal.”
The Harris survey spans 11 global markets and covers 13 industries. Pharma perception is even better abroad, with an average 58% of respondents notching favorable sentiments in 2023, just a slight slip from 60% in each of the two previous years.
Pharma’s solid global reputation puts it in the middle of the pack among international industries, ranking higher than government at 37% positive, insurance at 48%, financial services at 51% and health insurance at 52%. Pharma ranks just behind automotive (62%), manufacturing (63%) and consumer products (63%), although it lags behind leading industries like tech at 75% positive in the first spot, followed by grocery at 67%.
The bright spotlight on the pharma industry during Covid vaccine and drug development boosted its reputation, but Jekielek said there’s maybe an argument to be made that pharma is continuing to develop innovative drugs outside that spotlight.
“When you look at pharma reputation during Covid, you have clear sense of a very dynamic industry working very quickly and getting therapies and products to market. If you’re looking at things happening now, you could argue that pharma still probably doesn’t get enough credit for its advances, for example, in oncology treatments,” he said.
The COVID pandemic transformed our lives in ways many of us are still experiencing, four years later. One of these changes was the significant uptake in gaming as a hobby, chief among them being “cosy games” like Animal Crossing: New Horizons (2020).
Players sought comfort in these wholesome virtual worlds, many of which allowed them to socialise from the safety of their homes. Cosy games, with their comforting atmospheres, absence of winning or losing, simple gameplay, and often heartwarming storylines provided a perfect entry point for a new hobby. They also offered predictability and certainty at a time when there wasn’t much to go around.
Cosy games are often made by small, independent developers. “Indie games” have long been evangelised as the purest form of game development – something anyone can do, given enough perseverance. This means they can provide an entry point for creators who hadn’t made games before, but were nevertheless interested in it, enabling a new array of diverse voices and stories to be heard.
In May 2020, near the start of the pandemic, the small poetry game A Solitary Spacecraft, which was about its developer’s experience of their first few months in lockdown, was lauded as particularly poignant. Such games showcase a potential angle for effective cosy game development: a personal one.
Personal themes are often explored through cosy games. For instance, Chicory and Venba (both released in 2023) tackle difficult topics like depression and immigration, despite their gorgeous aesthetics. This showcases the diversity of experiences on display within the medium.
Historically, restructurings like these, or discontent with working conditions, have led talented laid-off developers to create their own companies and explore indie development. In the wake of the pandemic and the cosy game boom, these developers may have more personal stories to tell.
Making my own cosy game
I developed my own cosy and personal game during the pandemic and quickly discovered that creating these games in a post-lockdown landscape is no mean feat.
What We Take With Us (2023) merges reality and gameplay across various digital formats: a website, a Discord server that housed an online alternate reality game and a physical escape room. I created the game during the pandemic as a way to reflect on my journey through it, told through the videos of game character Ana Kirlitz.
The trailer for my game, What We Take With Us.
Players would follow in Ana’s footsteps by completing a series of ten tasks in their real-world space, all centred on improving wellbeing – something I and many others desperately needed during the pandemic.
But creating What We Take With Us was far from straightforward. There were pandemic hurdles like creating a physical space for an escape room amid social distancing guidelines. And, of course, the emotional difficulties of wrestling with my pandemic journey through the game’s narrative.
These struggles were starkly contrasted by the feedback I received from players who played the game, however.
This is a crucial lesson for indie developers: the creator’s journey and the player’s experience are often worlds apart. Cosy, personal games, as I discovered, can change the lives of those who play them, no matter how few they reach. They can fundamentally change the way we think about games, allow us to reconnect with old friends, or even inspire us to change careers – all real player stories.
Lessons in cosy game development
I learned so much about how cosy game development can be made more sustainable for creators navigating the precarious post-lockdown landscape. This is my advice for other creators.
First, collaboration is key. Even though many cosy or personal games (like Stardew Valley) are made by solo creators, having a team can help share the often emotional load. Making games can be taxing, so practising self-care and establishing team-wide support protocols is crucial. Share your successes and failures with other developers and players. Fostering a supportive community is key to success in the indie game landscape.
Second, remember that your game, however personal, is a product – not a reflection of you or your team. Making this distinction will help you manage expectations and cope with feedback.
Third, while deeply considering your audience may seem antithetical to personal projects, your game will ultimately be played by others. Understanding them will help you make better games.
The pandemic reignited the interest in cosy games, but subsequent industry-wide troubles may change games, and the way we make them, forever. Understanding how we make game creation more sustainable in a post-lockdown, post-layoff world is critical for developers and players alike.
For developers, it’s a reminder that their stories, no matter how harrowing, can still meaningfully connect with people. For players, it’s an invitation to embrace the potential for games to tell such stories, fostering empathy and understanding in a world that greatly needs it.
Looking for something good? Cut through the noise with a carefully curated selection of the latest releases, live events and exhibitions, straight to your inbox every fortnight, on Fridays. Sign up here.
Adam Jerrett does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
The SNF Institute for Global Infectious Disease Research announces new advisory board
From identifying the influenza virus that caused the pandemic of 1918 to developing vaccines against pneumococcal pneumonia and bacterial meningitis in…
From identifying the influenza virus that caused the pandemic of 1918 to developing vaccines against pneumococcal pneumonia and bacterial meningitis in the 1970s, combating infectious disease has a rich history at Rockefeller. That tradition continues as the Stavros Niarchos Foundation Institute for Global Infectious Disease Research at Rockefeller University (SNFiRU) caps a successful first year with the establishment of a new advisory board.
Credit: Lori Chertoff/The Rockefeller University
From identifying the influenza virus that caused the pandemic of 1918 to developing vaccines against pneumococcal pneumonia and bacterial meningitis in the 1970s, combating infectious disease has a rich history at Rockefeller. That tradition continues as the Stavros Niarchos Foundation Institute for Global Infectious Disease Research at Rockefeller University (SNFiRU) caps a successful first year with the establishment of a new advisory board.
This international advisory board was created in part to give guidance on how to best use SNFiRU’s resources, as well as bring forward innovative ideas concerning new avenues of research, public education, community engagement, and partnership projects.
SNFiRU was established to strengthen readiness for and response to future health crises, building on the scientific advances and international collaborations forged in the context of the COVID-19 pandemic. Launched with a $75 million grant from the Stavros Niarchos Foundation (SNF) as part of its Global Health Initiative (GHI), the institute provides a framework for international scientific collaboration to foster research innovations and turn them into practical health benefits.
SNFiRU’s mission is to better understand the agents that cause infectious disease and to lower barriers to treatment and prevention globally. To speed this work, the institute launched numerous initiatives in its inaugural year. For instance, SNFiRU awarded 31 research projects in 29 different Rockefeller laboratories for over $5 million to help get collaborative new research efforts off the ground. SNFiRU also supports the Rockefeller University Hospital, where clinical studies are conducted, and brought on board its first physician-scientist through Rockefeller’s Clinical Scholars program. “One of the surprises was the scope of interest from Rockefeller scientists in using their talents to tackle important infectious disease problems,” says Charles M. Rice, Maurice R. and Corinne P. Greenberg Professor in Virology at Rockefeller and director of SNFiRU. “The research topics range from the biology of infectious agents to the dynamics of the immune response to pathogens, and also include a number of infectious disease-adjacent studies.”
In the past 12 months, SNFiRU often brought together scientists studying different aspects of infectious disease as a way to spur new collaborations. In addition to hosting its first annual day-long symposium, SNFiRU initiated a Young Scientist Forum for students and post-doctoral fellows to meet regularly, facilitating cross-laboratory thinking. A bimonthly seminar series has also been established on campus.
Another aim of SNFiRU is to develop relationships with community-based organizations, as well as design and participate in community-engaged research, with a focus on low-income and minority communities. To that end, SNFiRU is helping develop a research project on Chagas disease, a tropical parasitic infection prevalent in Latin America that can cause congestive heart failure and gastrointestinal complications if left untreated. The project will bring together clinicians practicing at health centers in New York, Florida, Texas, and California and basic scientists from multiple institutions to help the communities that are most impacted.
“The SNFiRU international advisory board convenes globally recognized leaders with distinguished biomedical expertise, unrivalled experience in pandemic preparedness and response, and a shared commitment to translating scientific advancements into equitably distributed benefits in real-world settings,” says SNF Co-President Andreas Dracopoulos. “The advisory board will advance the institute’s indispensable mission, which SNF is proud to support as a key part of our Global Health Initiative, and we look forward to seeing breakthroughs in the lab drive better outcomes in lives around the globe.”
The new advisory board will hold its first meeting on April 11th, 2024, following the second annual SNF Institute for Global Infectious Disease Research Symposium at Rockefeller.
Its members are: Rafi Ahmed of Emory University School of Medicine, Cori Bargmann of The Rockefeller University, Yasmin Belkaid of the Pasteur Institute, Anthony S. Fauci, the former director of the National Institute of Allergy and Infectious Diseases, Peter Hotez of Baylor College of Medicine and Texas Children’s Hospital Center for Vaccine Development, Esper Kallas of of the Butantan Institute, Sharon Lewin of the University of Melbourne Doherty Institue, Carl Nathan of Weill Cornell Medicine, Rino Rappuoli of Fondazione Biotecnopolo di Siena and University of Siena, and Herbert “Skip” Virgin of Washington University School of Medicine and UT Southwestern Medical Center.
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