A Minor Setback Could Give You Great Profits
The market’s overreaction to one disappointing earnings report sets up a great trading opportunity.
With interest rates on the rise lately, banking stocks have gotten a lot of attention.
As I told subscribers of Super Options this week, when interest rates rise, banks’ margins go up as they make more revenue from lending money.
And as the economy recovers from the worst health crisis in a century, interest rates are sure to rise off the historic lows that were implemented to help keep the economy afloat during the pandemic.
With more and more Americans returning to work – with this week’s jobs report showing weekly jobless claims falling to a new low since the pandemic began – borrowing is expected to increase as we get further into 2021.
But a slight hiccup in banking stocks this week is driving stock prices of some of the biggest names in the sector down.
And that gives us a fantastic buying opportunity.
Where’s the money?
In a big week for banking earnings, all eyes were on Bank of America Corporation (BAC) as an indicator of how the fundamentals were stacking up to the impressive run up for bank stocks so far in 2021.
Despite a 17% revenue increase that beat analysts’ expectations, BAC stock is sliding as disappointing loan balances and higher than anticipated cost associated with the pandemic put a sour note on the earnings report.
As a result, many of the biggest banking names have also taken a hit this week.
But with at least one dose of COVID-19 vaccination now having been administered to nearly 40% of the U.S. population, the prospects for economic recovery are close to being realized.
As I see it, the drop in banking stocks this week is a minor blip that should be utilized to score some great profits.
These are my favorite names to play to do so…
How do I get some?
It’s a good bet that banks will start to improve their bottom line in the coming quarters.
I think that interest rates will go above 2% in 2021, so that means the bank stocks will move higher.
There are lots of great banking names out there that I would consider buying right now. I would buy the current weakness in the Financial Select Sector SPDR Fund (XLF) to take advantage of a sector-wide rise in 2021.
But my favorite play right now is The Goldman Sachs Group, Inc. (GS). With the strong earnings that they had, I believe it is the best profit opportunity this year in the banking space.
Banking Profits are Just the Beginning…
2021 has already been full of opportunities, and my Super Options readers and I have been taking advantage.
For example, this week members had the chance to cash in a 115% gain on YETI calls that I alerted to buy in late February after spotting the huge profit potential.
And that’s just one of many profitable trades we’ve closed this year – and more are on the way.
We have a lot of exciting things coming up, and I want you to be on board when it’s time to reveal the next big winner. Click here now to reserve your spot.
In the Spotlight: The Uncertain Road Ahead for Amazon
Amazon.com, Inc. (AMZN) announced a huge milestone this week. But growing pressure to make sweeping changes could dampen its success.
Amazon’s Prime service has now exceeded 200 million subscribers, an increase of 50 million new members over the span of the last year.
With such tremendous growth, you’d expect some big gains for its stock. But AMZN has remained relatively flat with the announcement.
That could be due to founder and former CEO Jeff Bezos’ comments on the need to treat its employees better.
Amazon has come under fire recently for the treatment of workers in its fulfillment warehouses.
Traders may well be pricing the anticipated costs and lowered productivity that the implementation of better working standards would cost the e-commerce giant.
I’ll be keeping a sharp eye on any news that comes out of this situation, and I’ll be sure to share my thoughts on whether Amazon’s meteoric rise is poised to continue or not. Stay tuned.