Banks serve as the backbone of the economy, facilitating lending, deposits, and financial services that keep businesses and consumers moving forward. But worries about an economic slowdown and potential credit deterioration have kept sentiment in check, and over the past six months, the banking industry has tumbled by 2.4%. This drop was disappointing since the S&P 500 climbed 5.5%.
Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. With that said, here is one resilient bank stock at the top of our wish list and two best left ignored.
Two Bank Stocks to Sell:
Hilltop Holdings (HTH)
Market Cap: $2.07 billion
Transformed from a residential communities business to a financial services powerhouse in 2007, Hilltop Holdings (NYSE: HTH) is a Texas-based financial holding company that provides banking, broker-dealer, and mortgage origination services.
Why Should You Dump HTH?
- Net interest income was flat over the last five years, indicating it’s failed to expand this cycle
- Anticipated 32.3 percentage point rise in its efficiency ratio suggests its expenses will increase as a percentage of revenue
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 11.6% annually, worse than its revenue
Hilltop Holdings’s stock price of $32.78 implies a valuation ratio of 0.9x forward P/B. To fully understand why you should be careful with HTH, check out our full research report (it’s free).
Dime Community Bancshares (DCOM)
Market Cap: $1.29 billion
With roots dating back to 1910 and a name that evokes the historic "dime savings banks" of America's past, Dime Community Bancshares (NASDAQ: DCOM) is a New York-based bank holding company that provides commercial banking and financial services to businesses and consumers throughout Greater Long Island.
Why Are We Cautious About DCOM?
- Annual sales declines of 5.5% for the past two years show its products and services struggled to connect with the market during this cycle
- Net interest margin of 2.6% is well below other banks, signaling its loans aren’t very profitable
- Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
Dime Community Bancshares is trading at $29.47 per share, or 1x forward P/B. If you’re considering DCOM for your portfolio, see our FREE research report to learn more.
One Bank Stock to Buy:
SouthState (SSB)
Market Cap: $9.87 billion
With roots dating back to the Great Depression era of 1933, SouthState (NYSE: SSB) is a financial holding company that provides banking services, wealth management, and correspondent banking services across six southeastern states.
Why Should You Buy SSB?
- Annual net interest income growth of 31% over the last five years was superb and indicates its market share increased during this cycle
- Net interest income outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 6.1% annually
At $95.82 per share, SouthState trades at 1.1x forward P/B. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
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