Big banks versus regionals—which is the better place for investors put their money? Matt McCormick, banking analyst and portfolio manager at Bahl & Gaynor Investment Counsel, and Dan Fitzpatrick, president of Stock Market Mentor, discussed their sector outlooks.
“In terms of risk, I’m not a big fan of banks and I’m especially not a big fan of the smaller regional banks, but if I had to choose, I’d be on the larger side,” McCormick told CNBC.
McCormick said the bigger financials have better fundamentals, more diverse product lines, less relative exposure to commercial real estate and a better fee-based environment.
“Regional banks have been red-hot and outperforming—if you look at the regional bank index within the S&P 500, it’s up 190 percent since March last year, up 30 percent year to date and up 14 percent in March and from a trading perspective, I don’t think that trend can last,” he added.
In the meantime, Fitzpatrick said he prefers the regional banks, despite the risks.
“Where there’s risk, there’s also potential reward,” he said. “These regional banks—if you are selective and if you find the ones that the market’s voting in favor of—you’re going to wind up on the right side of the trend and trade.”
Fitzpatrick Likes:
Huntington Bancshares
Regions Financial
Zions Bancorp.
McCormick Likes:
Scotiabank
Northern Trust
T. Rowe Price
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More Market Intelligence:
- Large Investment Banks Are Still 'Very Cheap'
- These Big Bank Stocks Are Set to Rise: Strategist
- Citigroup vs. Goldman Sachs—The Better Buy?
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CNBC Data Pages:
- Dow 30 Stocks—In Real Time
- Track the DJ Bank Index Here
- Where's the US Dollar Today?
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CNBC Slideshows:
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Disclosures:
McCormick’s firm Bahl & Gaynor owns shares of NBS, TROW and NTRS.
No immediate information was available for Fitzpatrick or his firm.
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