Banks serve as the backbone of the economy, facilitating lending, deposits, and financial services that keep businesses and consumers moving forward. But concerns about loan losses and tightening regulations have tempered enthusiasm, and over the past six months, the banking industry has pulled back by 6.9%. This drop was disappointing since the S&P 500 stood firm.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. With that said, here is one resilient bank stock at the top of our wish list and two we’re passing on.
Two BankStocks to Sell:
Dime Community Bancshares (DCOM)
Market Cap: $1.15 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 Does DCOM Worry Us?
- Sales tumbled by 10.2% annually over the last two years, showing market trends are working against its favor during this cycle
- 51.7 basis point (100 basis points = 1 percentage point) decline in its net interest margin over the last two years reflects the company’s willingness to accept lower yields to defend its market position
- Sales were less profitable over the last two years as its earnings per share fell by 35% annually, worse than its revenue declines
At $26.49 per share, Dime Community Bancshares trades at 0.8x forward P/B. Check out our free in-depth research report to learn more about why DCOM doesn’t pass our bar.
Annaly Capital Management (NLY)
Market Cap: $11.58 billion
Operating as a real estate investment trust since 1996 with a focus on generating income from interest rate spreads, Annaly Capital Management (NYSE:NLY) is a diversified capital manager that invests in agency mortgage-backed securities, residential mortgage loans, and mortgage servicing rights.
Why Should You Dump NLY?
- Inferior net interest margin of 0.1% means it must compensate for lower profitability through increased loan originations
- Earnings per share fell by 5.7% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Annual tangible book value per share declines of 8.5% for the past five years show its capital management struggled during this cycle
Annaly Capital Management’s stock price of $19.19 implies a valuation ratio of 1x forward P/B. Dive into our free research report to see why there are better opportunities than NLY.
One Bank Stock to Watch:
Cadence Bank (CADE)
Market Cap: $5.64 billion
With roots dating back to 1885 and a strategic focus on middle-market commercial lending, Cadence Bancorporation (NYSE:CADE) is a bank holding company that provides commercial banking, retail banking, and wealth management services to middle-market businesses and individuals.
Why Do We Like CADE?
- Impressive 20% annual net interest income growth over the last four years indicates it’s winning market share this cycle
- Earnings per share have outperformed the peer group average over the last two years, increasing by -2.4% annually
- Annual tangible book value per share growth of 22% over the past two years was outstanding, reflecting strong capital accumulation this cycle
Cadence Bank is trading at $30.28 per share, or 1x forward P/B. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum 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).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today