The financial sector was one of the S&P 500’s big winners in an outstanding year for equities. And market strategists believe many of the best financial stocks to buy for 2022 will be those carrying red-hot momentum over from 2021.
In 2021, financial stocks delivered a total return (price appreciation plus dividends) of 32% with just a few days left in the year. Only energy (+46%), real estate (+37%) and information technology (+33%) delivered superior returns. (For context, the S&P 500’s total return for 2021 came to +28% through Dec. 23.)
Rising interest rates – which benefit everything from banks’ net interest margins to insurance companies’ fixed-income holdings – an accelerating global economic recovery and moderating inflationary pressures are just a few of the tailwinds at the financial sector’s back in 2022, analysts say.
Be that as it may, not all financial stocks are created equal. A rising tide might lift all boats, but some sector names are forecast to be more buoyant than others. So we turned to Wall Street analysts to find the best financial stocks in the S&P 500 to buy for 2022, using data from S&P Global Market Intelligence.
Here’s how the ratings system works: S&P surveys analysts’ stock calls and scores them on a five-point scale, where 1.0 equals a Strong Buy and 5.0 is a Strong Sell. Scores between 3.5 and 2.5 translate into Hold recommendations. Scores higher than 3.5 equate to Sell ratings, while scores equal to or below 2.5 mean that analysts, on average, rate a stock as being a Buy. The closer a score gets to 1.0, the stronger the Buy recommendation.
From regional banks to multiline insurance firms to massive asset managers, the following 12 names rank as Wall Street’s best financial stocks to buy for 2022.
Stock prices, analysts’ recommendations and other data as of Dec. 26, courtesy of S&P Global Market Intelligence and YCharts, unless otherwise noted. Stocks are listed by analysts’ consensus recommendation, from lowest to highest.
- Market value: $52.0 billion
- Dividend yield: 3.1%
- Analysts’ consensus recommendation: 1.93 (Buy)
The pandemic has taken a toll on life and health insurance companies such as MetLife (MET, $61.78). But shares have rebounded in 2021, and analysts see more outperformance ahead for 2022.
“Despite near-term COVID-19 claim pressures, we view MET as an attractive way to play an economic and labor market recovery,” writes CFRA Research analyst Cathy Seifert, who rates shares at Buy. “Currently trading at 8.5 times our 2022 operating EPS [earnings per share] estimate and yielding 3.1%, we view the shares as undervalued vs. peers.”
Seifert’s view is pretty much the majority opinion on Wall Street, which gives MET a consensus recommendation of Buy. Of the 14 analysts issuing opinions on the stock tracked by S&P Global Market Intelligence, four call it a Strong Buy, eight say Buy, one rates it at Hold and one says Sell.
And their collective wisdom regarding MET’s valuation does indeed make the stock look compellingly priced, as Seifert contends. Shares trade at 8.5 times the Street’s average EPS estimate for 2022, and yet the insurer is forecast to generate average annual EPS growth of almost 6% over the next three to five years.
Furthermore, MET trades at a 7% discount to its own five-year average on an expected-earnings basis, per Refinitiv Stock Reports Plus.
It’s this value proposition that puts MetLife among 2022’s best financial stocks in the S&P 500 to buy.
- Market value: $119.5 billion
- Dividend yield: 3.4%
- Analysts’ consensus recommendation: 1.92 (Buy)
Leaner operations and an accelerating global economic recovery has the Street bullish on Citigroup’s (C, $60.21) profit outlook for 2022 and several years beyond.
Analysts forecast the nation’s fourth largest bank by assets to generate average annual EPS growth of 21.3% over the next three to five years, per S&P Global Market Intelligence.
An improving macro picture and easy year-over-year comparisons are just two of Citi’s tailwinds, however. The bank is sharpening its focus and profitability by making major strategic changes in its global consumer banking segment. Management’s intent is to direct investments and resources to the businesses with the greatest scale and growth potential.
Argus Research analyst Stephen Biggar cites the restructuring – as well as a depressed valuation – in making his Buy call on C stock.
“We believe that Citi’s improved capital position and better return on equity metrics just prior to the coronavirus downturn point to a firm that is well positioned to participate in the post-pandemic recovery,” Biggar writes.
Of the 25 analysts issuing opinions on C stock surveyed by S&P Global Market Intelligence, 10 rate it at Strong Buy, seven say Buy and eight call it a Hold. That equates to a consensus recommendation of Buy, putting it among 2022’s best bank stocks, in the pros’ eyes.
The Street’s average target price of $82.66 gives Citi stock implied upside of about 37% in the next 12 months or so.
10. Arthur J. Gallagher
- Market value: $34.5 billion
- Dividend yield: 1.2%
- Analysts’ consensus recommendation: 1.92 (Buy)
Arthur J. Gallagher (AJG, $166.45), which provides insurance brokerage and consulting services, has seen its stock beat the broader market by about 9 percentage points through 2021’s late innings. The Street forecasts even more outperformance in 2022.
Several of the 13 analysts issuing opinions on AJG have it among their best financial stocks to buy for 2022. Six rate it at Strong Buy, three say Buy, three have it at Hold and one says Sell. That works out to a consensus recommendation of Buy, per S&P Global Market Intelligence.
Raymond James analyst C. Gregory Peters rates the stock at Outperform (the equivalent of Buy), noting that a compelling valuation and a “bullish outlook for growth within the insurance brokerage industry through 2023” makes AJG one of the “most attractive insurance brokerage stocks.”
The Street forecasts AJG to generate average annual EPS growth of 15.1% over the next three to five years. Meanwhile, shares trade at 27.8 times analysts’ average 2022 EPS estimate.
If that valuation seems a bit rich, Raymond James’ Peters notes that although “some investors are concerned about the rising valuations of insurance brokers, the peer group has remained in-line with its five-year average relative valuation to the S&P 500.”
9. Citizens Financial Group
- Market value: $19.9 billion
- Dividend yield: 3.4%
- Analysts’ consensus recommendation: 1.89 (Buy)
Citizens Financial Group (CFG, $46.63) is another of the pros’ top bank stocks for 2022 that are expected to build upon their strong 2021 gains.
Shares in the regional lender and nation’s 16th largest bank by assets are leading the S&P 500 by about 5 percentage points for the year-to-date. Bulls say strength across multiple business lines should lead to further share-price outperformance in the new year.
“We think quarterly results highlighted the potential benefits of CFG’s relative diversification (mortgage, wealth, consumer fees, capital market fees, etc.) across the consumer and commercial portfolios, amid ongoing strategic initiatives including recent/pending ‘tuck-in’ acquisitions (including HSBC East Coast, JMP, Willamette),” writes CFRA Research analyst Tuna Amobi, who rates Citizens’ stock at Buy.
The Street gives CFG a consensus recommendation of Buy, with eight Strong Buy calls, seven Buys, three Holds and one Strong Sell opinion. Analysts forecast the bank to generate average annual EPS growth of 23.5% over the next three to five years. That’s extremely attractive when compared to the stock’s price, which currently is just 10.9 times the Street’s 2022 EPS estimate.
Indeed, Wedbush analyst Peter Winter (Outperform) cites valuation and the fact that the lender’s loan momentum is “starting to pick up” as reasons to rank CFG among the best financial stocks to buy for 2022.
8. Capital One Financial
- Market value: $61.8 billion
- Dividend yield: 1.7%
- Analysts’ consensus recommendation: 1.83 (Buy)
Capital One Financial (COF, $145.10) should serve up another year of outsized gains in 2022 as the economy and consumer spending patterns return to something closer to a pre-pandemic normal, bulls say.
Shares in the nation’s 11th largest bank by assets led the broader market by more than 20 percentage points with just a few days to go in 2021. And with an average 12-month target price of $186.48, analysts give COF roughly 29% in implied upside from here.
Morgan Stanley analyst Betsy Graseck rates Capital One’s stock at Overweight (the equivalent of Buy) as an “Omicron bounce-back” play. The analyst notes COF is trading at valuation lows just as the company’s “loan growth is about to take off.”
Over at Argus Research, analyst Stephen Biggar (Buy) notes Capital One is enjoying “encouraging signs as consumers emerge from the pandemic and begin to spend again.”
In particular, the bank is “seeing considerable opportunity in the credit card, consumer lending and auto lending segments, and plans to increase marketing in these areas,” Biggar adds.
The Street’s consensus recommendation on COF stands at Buy, with solid conviction. Of the 24 analysts issuing opinions on the stock polled by S&P Global Market Intelligence, 10 say Strong Buy, eight say Buy and six have it at Hold.
7. Synchrony Financial
- Market value: $25.3 billion
- Dividend yield: 1.9%
- Analysts’ consensus recommendation: 1.76 (Buy)
Strong and rising consumer spending should keep Synchrony Financial (SYF, $46.16) stock flying high in 2022, bulls say.
Shares in the private-label credit card and consumer finance company are up by a third late into 2021, beating the broader market by a comfortable margin. The Street sees plenty more upside ahead, too, giving SYF a consensus recommendation of Buy, and with fairly high conviction. Nine analysts rate it at Strong Buy and eight say Buy, while just four rate the stock at Hold.
Their average target price of $57.80 gives shares implied upside of about 25% in the next 12 months or so. As with many other financial sector names, analysts expect unusually high profit growth going forward.
Indeed, the Street forecasts Synchrony Financial to generate average annual EPS growth of 52% over the next three to five years. That easily places SYF among not just the best financial stocks to buy for 2022, but for the next few years.
“We believe that SYF’s comprehensive set of products/data analytics are key differentiators vs. new and existing participants,” writes Jefferies analyst John Hecht (Buy). “Given its scale, efficiencies, strong net interest margin, e-commerce exposure and excess capital, we believe SYF is well positioned to produce strong growth at attractive returns.”
And with shares trading at just 8.2 times the Street’s 2022 EPS estimate, Synchrony’s valuation appears attractive too.
6. Intercontinental Exchange
- Market value: $76.5 billion
- Dividend yield: 1.0%
- Analysts’ consensus recommendation: 1.74 (Buy)
An undervalued stock, an underappreciated acquisition and some new business streams make Intercontinental Exchange (ICE, $135.84) one of the best financial stocks to buy for 2022, analysts say.
ICE operates global exchanges and clearing houses for trading equities, options, futures and other securities. The company is best-known as the owner of the New York Stock Exchange. But ICE’s 2020 acquisition of Ellie Mae – a software firm that processes 35% of all U.S. mortgage applications – and some other data and tech efforts have bulls particularly enthused.
UBS Global Research analyst Alex Kramm (Buy) says ICE “trades at a discount to peers despite what we view as a strong mix of both recurring and transactional revenues.”
The issue, the analyst says, is that “exchange investors do not seem to pay up for recurring revenues.” However, as ICE moves into the data and mortgage technology space, shares could demand a higher premium.
“The acquisition of Ellie Mae enhances the growth profile of the company, but we think this has yet to be truly appreciated by many investors,” Kramm says.
UBS Global Research is in the majority on the Street, which gives ICE a consensus recommendation of Buy. Ten analysts rate the stock at Strong Buy, four say Buy and five call it at Hold.
- Market value: $138.8 billion
- Dividend yield: 1.8%
- Analysts’ consensus recommendation: 1.71 (Buy)
The Street is bullish on BlackRock (BLK, $913.92) for 2022. The world’s largest asset manager ($9.6 trillion in assets under management) should continue to benefit from high demand for its iShares exchange-traded funds (ETFs), bulls say.
“With $180 billion of net inflows in the first 11 months of 2021, the ETF division of BlackRock pulled in 1.5 times the cash haul achieved for all of 2020 to extend its industry-leading asset base to $2.4 trillion,” says Todd Rosenbluth (Buy), head of ETF and mutual fund research at CFRA Research.
Although competitor Vanguard gathered more than $300 billion in new money over the same period, “CFRA expects that as institutional investors further embrace ETFs in 2022, the strong liquidity of some of BlackRock’s largest funds will have added appeal to help it be positioned to recapture its flows leadership,” Rosenbluth adds.
Most of the Street agrees with Rosenbluth’s take, giving BLK a consensus recommendation of Buy. Seven analysts rate the stock at Strong Buy, four say Buy and three rate it at Hold.
Shares in BlackRock are beating the broader market by only about 1 percentage point for the year-to-date. If analysts’ consensus recommendation is correct, however, investors will enjoy wider outperformance in the new year.
4. S&P Global
- Market value: $114.2 billion
- Dividend yield: 0.7%
- Analysts’ consensus recommendation: 1.69 (Buy)
S&P Global (SPGI, $473.74) has strong prospects heading into 2022 thanks to increasing investor interest in environmental, social and governance (ESG) factors, as well as a new acquisition, bulls say.
SPGI, which provides financial information, analytics and ratings products, won regulatory approval in November for its $44 billion deal for competitor IHS Markit (INFO).
“We remain constructive on SPGI as we believe the pending INFO acquisition can drive meaningful upside through accelerated organic growth, more robust free cash flow generation (for investments or to return to shareholders), and a greater mix of recurring revenues,” writes UBS Global Research analyst Alex Kramm, who rates SPGI shares at Buy.
At the same time, bulls see tremendous growth in ESG-related products and services, the analyst adds.
“ESG remains a top investment area for the company,” says Kramm. “SPGI expects to be among the key players for ESG scores, and it is developing new ESG use cases across its businesses.”
ESG and other additional growth drivers are critical to the firm’s outlook, analysts note. Debt issuance is expected to slow down in 2022, which would impact S&P’s credit ratings business.
S&P Global earns a place among the best financial stocks to buy for 2022 thanks to a loaded bull camp. Of the 13 analysts issuing opinions on SPGI, seven rate it at Strong Buy and four say Buy, while just one calls it a Hold and another lone analyst says Sell.
3. Everest Re
- Market value: $10.5 billion
- Dividend yield: 2.3%
- Analysts’ consensus recommendation: 1.57 (Buy)
Everest Re (RE, $267.02) stock is lagging the broader market by more than 10 percentage points with just a few days left in 2021, but analysts believe it can bounce back in a big way in 2022.
Indeed, with an average target price of $320.86, the Street gives shares in the reinsurance company implied upside of 20% in the 12 months or so.
Better-than-expected quarterly results are helping drive the positive vibes on RE.
“Improved claim trends helped drive the improved combined ratio, to 89.3% from 97.5%,” writes CFRA Research analyst Catherine Seifert (Buy). “We lift our earned premium growth forecast to 16% to 20% in 2021 and 17% to 22% in 2022, as RE leverages increased demand and firmer rates for coverage, while shifting its policy mix to one that is less volatile.”
A low-priced stock also factors into the Street’s positive attitude. At 8.2 times analysts’ 2022 EPS forecast, RE trades at a steep discount to its own five-year average of 11.8, per Refinitiv Stock Reports Plus. Moreover, shares trade at a 60% discount to the S&P 500 on a forward earnings basis. That makes Everest Re one of 2022’s best financial stocks to buy for bargain hunters.
The Street’s consensus recommendation on the stock comes to Buy, and with high conviction. Four analysts call RE a Strong Buy, two say Buy and one rates it at Hold.
2. Signature Bank
- Market value: $19.4 billion
- Dividend yield: 0.7%
- Analysts’ consensus recommendation: 1.47 (Strong Buy)
Signature Bank (SBNY, $319.73) is one of two S&P 500 financial sector stocks to earn a consensus recommendation of Strong Buy. Given that shares have already more than doubled in 2021 – up 136% through Dec. 23 – it’s noteworthy that the Street expects SNBY to deliver even more outsized returns ahead.
Ten analysts rate shares at Strong Buy, six say Buy and one rates them at Hold. The pros’ average price target of $373.61 gives SBNY implied upside of 17% in 2022.
Perhaps more remarkably, analysts forecast the regional lender to generate average annual EPS growth of 18.5% over the next three to five years. At the same time, SBNY trades at 18.8 times the Street’s 2022 EPS estimate. That’s cheaper than the stock’s own five-year average of 19.5 times expected earnings, per Refinitiv Stock Reports Plus.
“We continue to believe Signature is well positioned for post-pandemic success given its ability to produce excellent balance sheet growth, superior EPS growth and attractive profitability metrics,” writes Raymond James analyst David Long (Strong Buy).
Over at Wedbush, which counts SBNY on its Best Ideas List, analyst David Chiaverini says his “Outperform rating is based on the company’s consistently strong deposit and loan growth, leadership position in the digital assets space and strong earnings growth outlook.”
- Market value: $8.7 billion
- Dividend yield: 1.8%
- Analysts’ consensus recommendation: 1.43 (Strong Buy)
Multi-line insurance company Assurant (AIZ, $152.28) receives the highest consensus recommendation of any financial stock in the S&P 500.
Among its tailwinds, analysts say AIZ is benefitting from consumers buying insurance on all the goods they’ve been snapping up in lieu of spending on services during the pandemic. When it comes to policies for everything from used cars to new 5G smartphones, Assurant is forecast to see increasing demand.
“Assurant continues to rebound from the pandemic, with premiums and fees (PFO) up 7% in the quarter versus 2% in 2020,” says William Blair analyst Jeff Schmitt, who rates AIZ at Outperform. “Global Automotive is benefiting from strong used car growth. Also, AIZ began a nationwide rollout of in-store device repair services for T-Mobile and extended its relationship with AT&T to manage its device trade-in program.”
Assurant is No. 1 among the best financial stocks to buy for 2022, though admittedly, that opinion comes from a small crowd. Of the seven analysts covering AIZ, four rate it at Strong Buy and three say Buy. Their average target price of $194.67 gives the stock implied upside of about 28% in the next 12 months or so.
The Street bullishness stems in part from AIZ’s attractive valuation. Shares trade at 12.7 times analysts’ 2022 EPS estimate, even as earnings are forecast to grow at an average annual rate of more than 17% over the next three to five years, per S&P Global Market Intelligence.