FINANCIAL SECTOR Kaleigh Theurer
DEFINITION Category of stocks containing firms that provide financial services to commercial and retail customers. This sector includes Banks Investment funds Insurance companies Real estate
FACTS Financial services perform best in low interest rate environments Generate revenue from mortgages and loans, which gain value as interest rates drop When the business cycle is in an upswing, the financial sector benefits from additional investments Improved economy means more capital projects and increased personal investing This leads to a larger number of loans
PAST PERFORMANCE
Stocks to watch Capital One Financial Berkshire Hathaway Lloyds Banking Group Aegon
CAPITAL ONE Undervalued because loan growth in automotive and commercial lending is not being considered High density markets like NYC and Washington DC Firm’s credit quality is underappreciated Non performing loans represents on 1.5% of total loans Still a top 5 credit card issuer Funding is not an issue Completed $83 billion in online deposits from ING’s US operations (CapitalOne 360) in 2012 Increased liquidity