The finance sector is showcasing its resilience, with several banking stocks touching a new 52-week high. It signifies positive momentum and suggests that the price has been steadily growing over the last 52 weeks. This might attract more investors and traders who regard the stock as a great performer and want to ride the current rising trend.
To narrow down the list, we have selected stocks with a market capitalization of $5 billion and above. Investors can keep a close watch on stocks like UMB Financial Corporation UMBF, Glacier Bancorp, Inc. GBCI, Pinnacle Financial Partners, Inc. PNFP, Western Alliance Bancorporation WAL and Regions Financial Corporation RF, as they are expected to maintain their momentum and keep scaling new highs.
Stocks that reach new 52-week highs are generally prone to profit-taking, resulting in pullbacks and trend reversals. Given their high price, investors frequently ask if it is overvalued. While the speculation is not completely unfounded, not all companies that reach a 52-week high are expensive.
To avoid the high pricing, investors may miss out on stocks with strong fundamentals.
The above-mentioned bank stocks outperformed the S&P 500 and the Finance sector over the past six months.
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To determine whether a stock has room for more upside, let’s delve deeper.
Factors Leading to Stocks Hitting New 52-Week High
Before discussing the banks mentioned above, let’s discuss the factors driving these banks to scale at a new high.
A major driving factor for this upward movement of banking stocks can be attributable to Fed Chairman Jerome Powell's statement the central bank is ready to cut interest rates next month. Jerome Powell, at the Kansas City Fed's annual economic symposium in Jackson Hole on Monday, said, “The time has come for policy to adjust.”
While the timing and pace of these rate cuts will "depend on incoming data," market participants were quick to signal four rate cuts of 25 basis points each by 2024-end. Powell stated that the central bank has "ample room" to maneuver as monetary policy enters its next phase without a high recession risk.
With the rate cut, the bank’s NII is expected to benefit as funding costs will stabilize. This is a positive development for banking stocks reeling under high fund costs. Such positive indicators reinforced investors' confidence in the banking sector and contributed to stocks touching a two-year high.
Banks are also making efforts to diversify their revenue streams to reduce dependency on spread income. Over the past few years, these companies have been actively acquiring or forming strategic partnerships to strengthen non-interest income. Also, the banks are active in increasing their footprint by expanding into unexplored yet high-growth markets.
Stocks to Watch as They Reach New 52-Week High
UMB Financial: Headquartered in Kansas City, MO, UMB Financial has been diversifying operations to non-interest sources to reduce exposure to spread income. Its investment in revenue-producing capabilities is likely to support top-line growth.
Further, UMBF is expected to benefit from a low-interest rate environment. The company’s NII witnessed a CAGR of 8.2% over the last four years (ended 2023), with the uptrend continuing in the first half of 2024. With the Federal Reserve indicating a rate cut beginning September 2024, the company’s NII is likely to benefit as funding costs will stabilize.
The Zacks Consensus Estimate for UMBF’s 2024 earnings has been revised upward to $8.54 per share in the past 30 days.
UMB Financial crafted a 52-week high, touching $105.72 before closing the session at $102.66 on Monday. UMBF currently has a market capitalization of $5 billion.
Glacier Bancorp: Headquartered in Kalispell, MT, GBCI provides a wide range of banking products and services with total assets of $27.8 billion as of June 30, 2024. In July 2024, GBCI acquired Community Financial Group, Inc., the bank-holding subsidiary of Wheatland Bank. This transaction enhances GBCI ‘s existing market presence and will likely benefit its financials in the long run.
The Zacks Consensus Estimate for GBCI’s 2024 earnings has remained steady at $1.62 per share in the past seven days.
GBCI touched a 52-week high of $47.71 before closing the session at $46.58 on Monday. At present, GBCI has a market capitalization of $5.28 billion.
Pinnacle Financial Partners: The company offering a diverse range of banking, investment, trust, mortgage, and insurance products and services expanded its footprint into North Florida with the addition of five veteran financial services professionals in January. This will allow the bank to dwell in high-growth markets and reap the benefits of it.
Also, the bank has been focusing on several strategic initiatives with the objective of capital optimization and balance sheet repositioning. Management anticipates to witness 8-10% growth in its NII in 2024 from $317 million in 2023.
The Zacks Consensus Estimate for PNFP’s 2024 earnings has moved 1.3% north at $6.83 per share in the past 60 days.
PNFP reached a 52-week high, touching $99.84 before closing the session at $97.66 on Monday. PNFP holds a market capitalization of $7.54 billion.
Western Alliance Bancorporation: One of the leading banking companies in the United States is benefitting from solid NII growth and increasing loan and deposit balances. Management expects NII to increase 9%-14% in 2024 from $2.3 billion reported in 2023.
WAL’s primary subsidiary, Western Alliance Bank, acquired Digital Settlement Technologies, DBA Digital Disbursements, the leading digital payments platform for the class action legal industry, in January 2022. Through this transaction, Western Alliance Bank enabled the seamless integration of a customizable pay menu into settlement claim forms and other payment selection websites.
The Zacks Consensus Estimate for WAL’s 2024 earnings has revised marginally upward to $7.40 per share in a month.
WAL touched a 52-week high of $83.23 before closing the session at $80.90 on Monday. WAL holds a market capitalization of $8.91 billion.
Regions Financial: Birmingham, AL-based financial holding company continues to benefit from expanding and diversifying its business operations on the back of investments in varied product offerings and through inorganic expansion efforts. The company acquired Clearsight, Sabal Capital, and EnerBank USA, which diversified its revenue sources.
Improvement in loan balances, combined with the Federal Reserve's indication of a potential rate cut beginning September 2024, is expected to stabilize funding costs and drive NII growth. With a solid foundation and strategic market presence, the company is well-poised for sustained growth in the long run.
The Zacks Consensus Estimate for RF’s 2024 earnings has moved upward by 1% at $2 per share in the past 60 days.
RF touched a 52-week high of $23.09 before closing the session at $22.79 on Monday. RF currently has a market capitalization of $20.86 billion.
Conclusion
The five bank stocks — UMBF, GBCI, PNFP, WAL, and RF — have decent growth prospects for the near future. They might have room left to run even higher. Thus, investors must keep these stocks on their radar and wait for an attractive entry point.
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