The financial sector was one of the S&P 500's biggest winners last year and market strategists believe the best financial stocks to buy for 2022 will outperform by wide margins once again.
In 2021, financial stocks delivered a total return (price appreciation plus dividends) of 35%. Only energy (+55%) and real estate (+46%) generated superior returns. (For context, the S&P 500's total return for 2021 came to +28.7%.)
Financial stocks are holding up their end of the bargain in the new year as well. As of Feb. 3, the S&P 500's year-to-date total return came to -6.0%. The index's financial sector, however, delivered a total return of +1.0% over the same span.
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, market values and dividends as of Feb. 3. Analysts' recommendations and other data as of Feb. 3, courtesy of S&P Global Market Intelligence and YCharts, unless otherwise noted. Stocks are listed by analysts' consensus recommendation, from lowest to highest.
12. Arthur J. Gallagher
- Market value: $32.2 billion
- Dividend yield: 1.3%
- Analysts' consensus recommendation: 1.92 (Buy)
Arthur J. Gallagher (AJG (opens in new tab), $154.45), which provides insurance brokerage and consulting services, has seen its stock beat the broader market by more than 10 percentage points last year. 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 earnings per share (EPS) growth of 14.8% over the next three to five years. Meanwhile, shares trade at 25.9 times analysts' average 2022 EPS estimate.
If that valuation seems a bit rich, Raymond James' Peters notes that AJG trades well below its peer group average.
11. Synchrony Financial
- Market value: $22.3 billion
- Dividend yield: 2.1%
- Analysts' consensus recommendation: 1.86 (Buy)
Strong and rising consumer spending should keep Synchrony Financial (SYF (opens in new tab), $42.25) stock flying high in 2022, bulls say.
Shares in the private-label credit card and consumer finance company are trailing the broader market early in the new year, but they have plenty of upside ahead, analysts say. After all, the Street gives SYF a consensus recommendation of Buy, and with fairly high conviction. Eight analysts rate it at Strong Buy and eight say Buy, while just five rate the stock at Hold.
Their average target price of $53.70 gives shares implied upside of about 27% 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 more than 29% 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.
"In the longer term, we believe the company is positioned well for continued growth given a strong pipeline of retail card partners, expanding e-commerce volumes and a superior co-brand product," writes Jefferies analyst John Hecht (Buy).
And with shares trading at just 7.6 times the Street's 2022 EPS estimate, Synchrony's valuation appears attractive too.
10. Citizens Financial Group
- Market value: $22.4 billion
- Dividend yield: 2.9%
- Analysts' consensus recommendation: 1.85 (Buy)
Citizens Financial Group (CFG (opens in new tab), $52.97) 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 up 13% for the year-to-date, vs. a decline of 6% for the S&P 500. Bulls say strength across multiple business lines should lead to further share-price outperformance in the new year.
"The company posted solid fourth-quarter earnings, helped by record capital markets and wealth management, and credit quality remains strong," writes Argus Research analyst Kevin Heal (Buy). "Citizens is also expanding its business with the acquisitions of the East Coast branches of HSBC, Willamette Management Associates and Investors Bancorp."
The Street gives CFG a consensus recommendation of Buy, with nine Strong Buy calls, seven Buys, three Holds and one Strong Sell opinion. Analysts forecast the bank to generate average annual EPS growth of 17.8% over the next three to five years. That's extremely attractive when compared to the stock's price, which currently is just 12.4 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.
9. Capital One Financial
- Market value: $61.4 billion
- Dividend yield: 1.6%
- Analysts' consensus recommendation: 1.83 (Buy)
Capital One Financial (COF (opens in new tab), $148.29) 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 are positive for the year-to-date to beat the broader market by about 8 percentage points. And with an average 12-month target price of $182.83, analysts give COF roughly 23% in implied upside from here.
"We are maintaining our Buy rating on Capital One Financial following fourth-quarter results," writes Argus Research analyst Stephen Biggar. "Average loans again rose 6% sequentially, an encouraging sign as pandemic pay-downs recede and consumer spending increases."
Biggar adds that the company is "well positioned for the long term in the credit card space," and points to COF's partnership with Walmart (WMT (opens in new tab)) as an example. COF will be the exclusive issuer of the world's largest retailer's private-label and co-branded credit cards in the U.S.
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.
8. Raymond James Financial
- Market value: $22.4 billion
- Dividend yield: 1.2%
- Analysts' consensus recommendation: 1.82 (Buy)
Shares in Raymond James Financial (RJF (opens in new tab), $108.05) are bucking the trend big time so far in 2022 and bulls say they're just getting started.
RJF is up almost 8% for the year-to-date, vs. a decline of 6% for the S&P 500. Investors are rewarding the diversified financial services firm for posting record fiscal first-quarter results, where robust net inflows at its private client and asset management divisions helped lead the charge.
"RJF reported record quarterly net revenues of $2.78 billion, driven by higher asset management fees and higher brokerage revenues," writes Argus Research analyst Kevin Heal (Buy). "Record investment banking and M&A advisory fees from recent acquisitions also boosted the bottom line."
Heal adds that he expects RJF "to remain in expansion mode as it brings additional advisers to its platform and makes strategic acquisitions that fit within its long-term plan."
The Street is likewise bullish on the name, giving RJF a consensus recommendation of Buy, with fairly high conviction. Five analysts rate shares at Strong Buy, three say Buy and three have them at Hold, per S&P Global Market Intelligence.
Importantly, the Street expects RJF stock to maintain its market-beating ways. Analysts' average target price of $130.00 gives shares implied upside of about 20% in the next 12 months or so.
- Market value: $57.0 billion
- Dividend yield: 2.8%
- Analysts' consensus recommendation: 1.81 (Buy)
The pandemic has taken a toll on life and health insurance companies such as MetLife (MET (opens in new tab), $67.73). But shares rebounded last year, and analysts see more outperformance ahead for 2022.
"We see operating revenue growth of 3% to 6% in 2022 and 2023 on favorable Group Benefits and overseas gains, despite lower pension risk transfer volume," writes CFRA Research analyst Cathy Seifert, who rates shares at Buy. "We see an easing of COVID-19 claims and further margin gains providing the shares (yielding 2.8%) with a catalyst."
Seifert's view is pretty much the majority opinion on Wall Street, which gives MET a consensus recommendation of Buy. Of the 16 analysts issuing opinions on the stock tracked by S&P Global Market Intelligence, six 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 9.4 times the Street's average EPS estimate for 2022.
Furthermore, MET trades at a 58% discount to its own five-year average on a trailing 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.
6. Intercontinental Exchange
- Market value: $72.1 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 (opens in new tab), $127.89) 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 "the acquisition of Ellie Mae enhances the growth profile of the company," but the deal has yet to be fully appreciated by most investors.
"We believe ICE is a strong collection of highly complementary businesses across trading, clearing and data," writes Kramm. "ICE will be able to realize solid growth, continue to gain scale benefits, and further capitalize on the growing value of its data content as it introduces new products and services over time."
The analyst adds that ICE's growing presence in mortgage technology should support multiple expansion over time.
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: $122.2 billion
- Dividend yield: 2.0%
- Analysts' consensus recommendation: 1.64 (Buy)
The Street is bullish on BlackRock (BLK (opens in new tab), $805.77) for 2022. The world's largest asset manager (more than $10 trillion in assets under management) should continue to benefit from high demand for its iShares exchange-traded funds (ETFs), bulls say.
"We see 10% to 15% higher revenues in 2022, though recent fund flows trends may lift this rate of growth higher," writes CFRA Research analyst Cathy Seifert, who rates the stock at Strong Buy. "Full-year organic assets under management growth of 6% tops most peers, widening the moat around BLK."
Over at Argus Research, analyst Stephen Biggar (Buy) notes that the firm's iShares franchise has allowed the firm to dominate the ETF market, with strong organic growth in the U.S. and Europe over the past year.
"With some $3.3 trillion in ETF assets under management, BlackRock's franchise is the largest ETF provider, well ahead of second-place Vanguard," Biggar says.
Most of the Street is bullish on the asset manager, giving BLK a consensus recommendation of Buy. Seven analysts rate the stock at Strong Buy, five say Buy and two rate it at Hold.
Shares in BlackRock are down sharply for the year-to-date, but if analysts' consensus recommendation is correct, investors will be happy they bought low. The Street's average target price of $1,006.38 gives BLK implied upside of 25% over the next 12 months.
4. S&P Global
- Market value: $99.5 billion
- Dividend yield: 0.7%
- Analysts' consensus recommendation: 1.62 (Buy)
S&P Global (SPGI (opens in new tab), $413.15) 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 (opens in new tab)).
"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 two call it a Hold.
3. Everest Re
- Market value: $11.2 billion
- Dividend yield: 2.1%
- Analysts' consensus recommendation: 1.57 (Buy)
Everest Re (RE (opens in new tab), $285.24) stock is up more than 4% so far in 2022, and analysts believe it can add to its market-beating ways.
Indeed, with an average target price of $326.71, the Street gives shares in the reinsurance company implied upside of 14% in the next 12 months or so.
Better-than-expected third-quarter results helped 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 8.8 times analysts' 2022 EPS forecast, RE trades at a steep discount to its own five-year average of 11.7, per Refinitiv Stock Reports Plus. Moreover, shares trade at a 59% 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.
- Market value: $8.6 billion
- Dividend yield: 1.8%
- Analysts' consensus recommendation: 1.43 (Strong Buy)
Multi-line insurance company Assurant (AIZ (opens in new tab), $151.80) is one of two S&P 500 financial sector stocks to receive a consensus recommendation of Strong Buy.
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 one of the top 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 $194.17 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 12.8 times analysts' 2022 EPS estimate, even as earnings are forecast to grow at an average annual rate of 15% over the next three to five years, per S&P Global Market Intelligence.
1. Signature Bank
- Market value: $18.8 billion
- Dividend yield: 0.7%
- Analysts' consensus recommendation: 1.39 (Strong Buy)
Signature Bank (SBNY (opens in new tab), $310.78) gets the highest consensus recommendation of any financial sector stock in the S&P 500. Shares are down with the rest of the market so far this year, but the Street says it's time to buy the dip.
Eleven analysts rate shares at Strong Buy and seven say Buy. The pros' average price target of $429.83 gives SBNY implied upside of 38% in 2022.
Perhaps more remarkably, analysts forecast the regional lender to generate average annual EPS growth of 12.3% over the next three to five years. At the same time, SBNY trades at just 16.5 times the Street's 2022 EPS estimate.
"We reiterate our Strong Buy rating on SBNY shares following its release of fourth-quarter financial results that included strong EPS and pretax pre-provision income beats, as well as explosive balance sheet growth," writes Raymond James analyst David Long. "The bank's highly asset sensitivity position remains in place, leaving it well positioned for higher bond yields and rate hikes."
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."
Dan Burrows is a financial writer at Kiplinger, having joined the august publication full time in 2016.
A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. He has written for The Wall Street Journal, Bloomberg, Consumer Reports, Senior Executive and Boston magazine, and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among other publications. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities.
Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.
In his current role at Kiplinger, Dan writes about equities, fixed income, currencies, commodities, funds, macroeconomics and more.
Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.
Disclosure: Dan does not trade stocks or other securities. Rather, he dollar-cost averages into cheap funds and index funds and holds them forever in tax-advantaged accounts.
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