The Zacks Analyst Blog Highlights: First Business Financial Services, Hilltop, Reliant Bancorp, Eagle Bancorp Montana And First Financial Bankshares
Zacks Investment Research | Oct 22, 2019 11:03PM ET
For Immediate Release
Chicago, IL – October 23, 2019, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: First Business Financial Services Inc. (NASDAQ:FBIZ) , Hilltop Holdings Inc. (NYSE:HTH) , Reliant Bancorp Inc. (NASDAQ:RBNC) , Eagle Bancorp Montana Inc. (NASDAQ:EBMT) and First Financial Bankshares Inc. (NASDAQ:FFIN) .
Here are highlights from Tuesday’s Analyst Blog:
5 Top Bank Stocks to Buy with Yield Curve North-Bound
On May 16, yields on several U.S. sovereign bonds spiked following positive development on U.S.-China trade war front and better-than-expected performance by U.S. corporates in the third quarter of 2019. Moreover, the U.K. parliament has forced prime minister Boris Johnson to ask for an extension of the Brexit deadline. Investors dumped safe-haven government bonds and opted for risky assets like equities, which resulted in a Wall Street rally.
As a result of these developments, the stock prices of several banks surged. A hike in government bond yield will raise the cost of funds, which in turn will enable the financial sector, especially banks, to widen the spread between longer-term assets, such as loans, with shorter-term liabilities, thus boosting the sector’s profits.
U.S. Government Bond Yields Surge
On Oct 21, the yield on benchmark 10-year U.S. Treasury Note increased 4.7 basis points to 1.794%, the highest in four weeks. The yield on long-term 30-year U.S. Treasury Note gained 4.3 basis points to 2.286%, the highest since Sep 16. Moreover, the yield on short-term 2-year U.S. Treasury Note was up 4.1 basis points to 1.615%.
Following the hike in sovereign bond yields, S&P Financials Select Sector SPDR (XLF) rose 1.4%. Year to date, XLF is up 17.3%. Moreover, the SPDR S&P Regional Banking ETF (NYSE:KRE), the SPDR S&P Bank ETF (NYSE:KBE) and the KBW Nasdaq Bank Index (BKX) gained 1.3%, 1.4% and 1.8%, respectively, on Oct 21.
Positive Development on Trade War Front
As per a Bloomberg report, on Oct 18, Chinese vice premier said, “China and the U.S. have made substantial progress in many aspects, and laid an important foundation for a phase one trade agreement.” On Oct 21, President Donald Trump said efforts to end a U.S. trade war with China were going well as the first phase of the trade deal is likely to be signed in the middle of next month.
U.S. Trade Representative Robert Lighthizer told reporters that White House is aiming to finalize the first phase of the deal at the Asia-Pacific Economic Cooperation meetings in Chile on Nov. 16 and 17, where the two presidents are supposed to meet.
White House economic adviser Larry Kudlow said that the Trump administration could withdraw its proposed 15% tariff on $160 billion of Chinese goods effective Dec 15, if negotiations continue to go well.
Brexit Likely to be Delayed Further
On Oct 19, after a majority voting, the U.K. parliament has forced prime minister Boris Johnson to ask the European Union for a three-month extension to the Oct. 31 deadline to exit from the trade bloc. The prime minister’s effort to seek another trust vote in parliament on Oct 21 was thwarted by the U.K. House of Commons Speaker John Bercow, who declared that a new vote “would be repetitive and disorderly.”
Consequently, Boris Johnson’s attempt to quit EU even with no deal by Oct 31 was denied by British lawmakers. Several industry researchers have warned that such as situation will have severe negative impact on the global economy and financial markets.
Our Top Picks
At this stage, it will be prudent to invest in banking stocks with favorable Zacks Rank ----Zacks Rank #1 (Strong Buy) or 2 (Buy) ---- and strong growth potential. We have narrowed down our search to five stocks, which have popped in the past three months and still have upside left. You can see Zacks Investment Research
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