2 Incredibly Cheap Bank Stocks to Buy Now
Last years wasn't the best for bank stocks. Although many companies felt pressure, banks feel the impact of inflation and rising interest rates more acutely than some other companies. In general, those two conditions lead to higher default rates and hit banks' net interest income. There are positives, though, such as increases in deposits.
However, although they struggled through most of the year, bank stocks have soared since the Federal Reserve said last month that it might cut interest rates in 2024. Some bank stocks closed out the year beating the market, but there are still bargains to be had. Warren Buffett is known for his embrace of the value approach to investing, and his two favorite bank stocks these days are also incredibly cheap. If you're looking for quality value stocks, consider buying Ally (NYSE: ALLY) and Bank of America (NYSE: BAC).
Ally is the largest all-digital bank in the U.S. It started as the financial arm of General Motors, and it was spun off to become a separate company, but it retains a robust auto lending segment. Auto lending was still strong in 2023 despite the negative impact of high interest rates. Ally had a record 3.7 million applications, but with its effective risk-management software, it had a 30% approval rate and originated $10.6 billion in loans.
Source Fool.com
