Despite Downturns, Analysts Say These 4 Financial Stocks Are Buys

Key Points

• Amid a market downturn, Bank of America, S&P Global, Reinsurance Group of America, and JPMorgan Chase & Co. are trading at lower valuations, with analysts maintaining positive ratings. 
• Bank of America and JPMorgan beat earnings estimates, while RGA boasts 16 years of dividend growth, making these stocks attractive holds. 
• Analysts also predict an almost 20% upside for S&P Global, though rising short interest rates can give some investors pause. 

Threats of tariffs and reductions to government spending have the American markets in a shaky position as the S&P 500 pushes into correction territory. Among stocks seeing the hardest hits were financial picks, with companies like Morgan Stanley NYSE: MS and SoFi Technologies NASDAQ: SOFI seeing shares fall up to 12% on Monday alone.

While financial markets are being hit especially hard during the current sell-off, bear markets present opportunities for investors to build portfolios designed for long-term wealth creation. Analysts say these financial stocks are buys, with a market downturn presenting them at exceptionally low prices. 

Bank of America Beats Earnings Estimates

Investors looking for value stocks to snatch up during the current market pressure are eyeing Bank of America NYSE: BAC shares. Analyst ratings give the company a Moderate Buy consensus rating. Analysts predict a potential upside of more than 17% from current share prices, indicating a high level of confidence in long-term share price appreciation. 

Following a rough third quarter of 2024 (which saw $10 billion in institutional investment sales) that slightly improved by the end of the year, BAC is starting 2025 with an impressive earnings report. The company beat earnings estimates by $0.05 per share, with earnings expected to grow by an additional 17.82% within the next year. 

Shares of Bank of America are trading lower on fears of a recession. Bank stocks traditionally underperform during periods of economic stress. Current share prices are trading near a 50-day low on Tuesday, resulting in a P/E ratio of 12.83. This higher earnings result and price suppression could present a buying opportunity for long-term investors. 

S&P Global Sees 20% Anticipated Analyst Upside 

A name familiar to most investors, S&P Global NYSE: SPGI is currently trading near a 50-day low of $478 off recession fears and dips in the value of the S&P 500. It also maintains analysts' Moderate Buy rating, with an anticipated 19.84% increase in share prices. These analyst estimates suggest that recent dips in share prices may be driven by the broader market sell-off of S&P 500 shares.

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Despite high analyst expectations, it’s important to note that, like the S&P 500 index, SPGI's P/E value is a bit lofty. Lower prices have brought the company’s P/E ratio to 39.63, which could indicate that prices are still overvalued compared to shares of BAC. Short interest trends on SPGI shares also indicate lower confidence, with a 25% increase in short interest from last month. 

EPS Struggles Leave RGA With 20% Potential Upside

While Reinsurance Group of America NYSE: RGA has seen share prices dip almost 10% since the beginning of the year, the company’s solid underlying fundamentals justify its Moderate Buy consensus rating. While the company missed its most recent earnings estimate of $0.23 per share, its EPS remains competitive, with industry averages at 17.95.

It’s important to note that, like S&P Global, RGA has seen recent red flags in its month-to-month short interest, with interest rates rising more than 35% in the last month. This may not make this stock suitable for short-term plays, but with only 0.64% of the float shorted, long-term positive analyst expectations look more likely. 

Reinsurance Group of America can also be a stronger long-term play thanks to its consistent dividend. While its current 1.85% dividend yield isn’t exceptional, it maintains this dividend with a reasonable payout ratio of 33.15%, which can contribute to long-term, consistent payout growth. RGA has already shown 16 years of dividend growth, with an annualized three-year growth rate of 6.76%, competitive with other insurance stocks. 

JPMorgan Presents a Special Low P/E Ratio

For another S&P 500 stock that the market may undervalue, consider JPMorgan Chase & Co. NYSE: JPM, which is trading closer to its 50-day low price of $224 per share.

This has resulted in an exceptionally low P/E ratio of 11.88 and a dividend yield above 2%. With a consensus Moderate Buy rating, market sentiment suggests the current share sell-off could be an overcorrection.

JPM maintains a lower potential upside than other picks on our list, with a 7.7% anticipated upside. Earnings data is solid, with the company beating its most recent consensus estimate of $4.03 by $0.78. JPMorgan can also be an appealing dividend play for growth, with an annualized three-year payout growth rate of 8.10%.