Thanks to tax refunds and stimulus checks, many Americans are flush with cash and ready to put some dollars behind those financial resolutions they made way back on January 1. With a universe of stocks to choose from, however, figuring out where to start can be as hard as coming up with the money to invest.
America’s big banks know a thing or two about turning small piles of cash into big piles of cash, and investors who want to do the same would be wise to listen to their advice. Bankers, after all, are the world’s undisputed masters of profiting from the analysis of risk vs. reward. Bank analysts are the ones who set widely followed price targets for stocks and issue ratings advising investors whether to buy, hold or sell.
The following is a synopsis of the investment guidance coming from the country’s biggest banks moving into spring. GOBankingRates created this list by consulting news reports, financial industry press releases and editorial analyses.
Readers will notice that in many cases, analysts and experts from the big banks recommended that investors put their money into — you guessed it — big banks. It’s not just shameless self-promotion. There is good reason to believe that financial stocks are in for a profitable year. It’s the banks, after all, that will finance the explosion in consumer and business spending that is likely to define 2021 and the economic recovery it’s expected to bring.
Now Is the Time To Invest
There is a widespread consensus among financial industry analysts that no matter your investment of choice, now is the time to put your money down. Thanks to bulked up stimulus checks, an incredibly fast and efficient vaccine rollout and a long-elusive sense of general optimism, the U.S. economy is expected to experience extraordinary growth in the coming year. Bank of America, for example, increased its GDP growth forecast from an already-stellar 6% to 6.5% on the year as rapid economic recovery seems all but certain.
Bank of America Is Sweet on the Financial Industry
If you have limited funds and you’re not sure where to invest, consider banking on the banks. Economic recoveries like the kind that are expected to dominate 2021 require lots and lots of borrowed money. That’s good news for the people who do the lending. In late March, Bank of America announced it was bullish on the banking industry as a whole, with one of its analysts increasing her average price target for U.S. bank stocks by 11%. JPMorgan Chase, Citigroup, Wells Fargo and M&T bank all saw their targets either raised or reiterated.
Goldman Sachs Is Sweet on Bank of America
When Bank of America analysts raise expectations for big banks, it shouldn’t be ignored that Bank of America itself is one of the biggest banks of them all. At the end of January, Goldman Sachs shared Bank of America’s bullish sentiment on the industry as a whole, but Goldman went out of its way to give an extra dose of love to Bank of America specifically. Goldman increased its price target for Bank of America stock from $33 to $37. Goldman’s rating for Bank of America stock remains the same: buy.
But Beware of Industry Landmines Like Credit Suisse
It’s true that the banking industry and the financial sector, in general, are home to some of the hottest stocks of 2021, but it’s not all roses. Wall Street was stunned by the recent implosion of a major financial firm called Archegos Capital Management. Any company that was close to Archegos is now toxic, and Credit Suisse was way, way too close for comfort. On March 31, Bank of America downgraded its price target for Credit Suisse for the second time in three days, sending the stock’s price tumbling.
Pedal to Profits With Peloton
It was in late January when a Bank of America rating sent Peloton shares moving in the other direction from Credit Suisse. Bank of America increased its price target for Peloton from $150 all the way to $175, which made existing investors happy, to say the least, and brought plenty of new investors on board. The company took off in 2020 as a year of shuttered gyms made the in-home stationary bike subscription service a hot commodity. Bank of America thinks Peloton still has plenty of room to grow moving into 2021.
Your Favorite TV Channels Might Not Make Great Stock Picks
In late March, Wells Fargo rained on the parade of three of the biggest entertainment network giants in the world, all of which have big footprints in the streaming world. AMC Networks, Discovery and ViacomCBS all tumbled when a Wells Fargo analyst issued a report saying that the stocks had peaked and were valued too high before dramatically slashing their price targets.
Wells Fargo Likes a Trio of Chip Stocks
If you can handle the cyclical nature of the semiconductor industry, Wells Fargo thinks it knows which three chip stocks are most likely to shine in 2021. Micron Technology is hot because of its recent record of increased profits and growing market cap. Advanced Micro Devices offers some of the industry’s stiffest competition to Intel and its gaming chips are among the most popular on Earth. Finally, there’s Western Digital Corporation, which Wells Fargo likes because of its propensity for beating Wall Street expectations with strong earnings reports.
Chase Is Hot For a Corporate Streaming Service
On24 is popular with companies that use its streaming services for their own networked events, multimedia displays, virtual events and webinars. In March, JPMorgan Chase named On24 as one of the three stocks it believes could experience growth approaching 50%. The logic is that the On24 platform and business model is perfectly positioned to benefit from the permanent changes that COVID-19 has had on B2B marketing.
Several Banks Have High Hopes for HP
Equity researchers at JPMorgan Chase raised their price target for Hewlett Packard Enterprise from $17 to $18 at the end of March. They were hardly the only representatives of America’s big banks who were optimistic about HP’s prospects for a bright 2021. Smith Barney Citigroup, Bank of America and Raymond James all issued positive reports and/or upped their target prices for Hewlett Packard in the last few months.
Square Stands Out Among Cash Apps
Deutsche Bank is betting big on Square, the money processing/cash app service that did so well in 2020. A lot of cash apps, however, did well last year but are starting to cool with Deutsche Bank and many other big financial firms today. Square is one of the few standouts that is expected to keep roaring through 2021. Deutsche Bank’s optimism is based on the fact that its analysts believe Square will benefit more than its competitors from stimulus spending.
Facebook Still Has Fangs
The FAANG stocks have largely lost their rock star status among industry experts and analysts — but not the one that starts the acronym. Facebook stock soared by 1.8% at the tail end of March when Deutsche Bank increased its target price as part of a report that gave investors a reason to smile. Much of the confidence comes from Facebook’s ad market, but the bank was also bullish on Facebook’s pivot toward in-platform e-commerce.
Bank of America Is Going to Disneyland
As early as July 2020, Disney shares climbed on a bullish report from a Bank of America analyst who used the moment to re-commit to her “buy” rating. Going into 2021, Disney remained at the tippy top of Bank of America’s favorite stocks of the year. With families eager to splurge on long-denied resort vacations, it’s easy to see why Disney would be a hot pick. Investors agree. Disney is now trading near $190, a long distance from its March 2020 sub-$100 lows.
No One Loves GE Like Morgan Stanley
GE had just set a new 52-week high in early March when it topped the $14 mark right around the time Morgan Stanley showed more love for GE than any other investment bank on Wall Street. The bank raised its GE price target from $13 all the way up to $17, quite a move considering GE was barely trading above $10 on Jan. 1. As of April 1, GE is trading at around $13.30.
Morgan Stanley Wants To Pay Its Shareholders More
Morgan Stanley recently issued a letter to shareholders that might make you want to join them. The bank’s CEO stated that Federal Reserve restrictions are the only thing preventing Morgan Stanley from increasing its dividend payouts. Once the federal pandemic restrictions are lifted, Morgan Stanley will buy back $10 billion of its own stock and pay its shareholders a bigger dividend, so if you’re an income investor, this might be a good time to get on board.
Don’t Bet on Theater Stocks
From Disney and the airlines to cruise ships and hotels, many industries and brands that were battered in 2020 are expected to spring back in 2021. When it comes to movie theaters, however, the jury is still out. The theater experience was already on the wane before the pandemic thanks to cheap big-screen TVs and streaming everything. Now, it’s not so certain that people will ever go back to the movies. In mid-March, Citi sent AMC shares into the basement when it refused to change its “sell” rating and measly $2 price target.
A Swiss Bank Is Betting on Apple
Swiss investment bank UBS waited until the last day of March to upgrade its rating for Apple to “buy,” but upgrade its rating, it did. UBS cited strong long-term iPhone demand through at least 2022 as justification for the change. So far this year, Apple’s price dropped off in February and hasn’t rebounded since. It’s now at about $123 and UBS’ price target has grown to $142.
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Editorial Note: This content is not provided by Chase. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by Chase.