The financial market this year benefits from the stability of the U.S. economy, with reduced recession risks and strong growth forecasts boosting market confidence. A solid labor market supports consumer spending, driving economic activity and benefiting financial services.

Therefore, investors could consider buying fundamentally strong financial stocks such as Citigroup Inc. (C), Barclays PLC (BCS), and Deutsche Bank Aktiengesellschaft (DB) which have attractive valuations.

With inflation nearing the 2% target, financial stability is improving, boosting investor confidence. Prospects of rate cuts, extended tax breaks, and eased regulations further support sector growth and profitability. According to Statista, the total revenue of the worldwide finance market is expected to grow at a CAGR of 9.1%, reaching $2.89 billion by 2029.

Furthermore, the financial sector is thriving globally, driven by expanding internet access, streamlined regulations, tech advancements, smart risk management, and supportive policies. Growing consumer preference for digital banking, payments, and investing further fuels its growth. Considering these conducive trends, let’s analyze the fundamental aspects of the three financial picks.

Citigroup Inc. (C)

C is a global, diversified financial services holding company offering various financial products and services to consumers, corporations, governments, and institutions. It operates through five segments: Services, Markets, Banking, U.S. Personal Banking, and Wealth.

On November 12, 2024, C and Bank of Shanghai launched a groundbreaking payments solution for the TourCard, enabling international travelers to make seamless and cost-efficient mobile payments in China using C’s USD Clearing and Swift Go services. This innovation simplifies adding funds and enhances the payment experience for overseas visitors.

On October 28, 2024, C announced a strategic partnership with Google Cloud to modernize its technology infrastructure and enhance innovation using AI. The collaboration includes migrating workloads to Google Cloud and leveraging Vertex AI for generative AI capabilities.

In terms of forward non-GAAP P/E, C’s 11.76x is 12.9% lower than the 13.50x industry average. Similarly, its 1.65x forward Price/Sales is 49.9% lower than the 3.29x industry average. Also, its 0.68x forward Price/Book is 49.2% lower than the 1.34x industry average.

C’s total revenues for the third quarter, which ended on September 30, 2024, rose marginally year-over-year to $20.32 billion. Its net income also grew slightly year-over-year to $3.24 billion. Additionally, its book value per share increased by 2.2% year-over-year, reaching $101.91.

Analysts expect C’s EPS and revenue for the quarter ending December 31, 2024, to increase 47% and 11.2% year-over-year to $1.23 and $19.40 billion, respectively. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, C’s stock has gained 55.1% to close the last trading session at $69.84.

C’s POWR Ratings reflect strong prospects. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It has a B grade for Value. It is ranked first out of 9 stocks in the Money Center Banks industry. Beyond what we stated above, we also have given C grades for Growth, Momentum, Stability, Sentiment, and Quality. Get all of C’s ratings here.

Barclays PLC (BCS)

Headquartered in London, United Kingdom, BCS provides various financial services across the United Kingdom, Europe, the Americas, Africa, the Middle East, and Asia. The company operates through its Barclays UK and Barclays International divisions.

In terms of forward Price/Sales, BCS’ 1.42x is 56.9% lower than the 3.29x industry average. Likewise, its 8.82x forward non-GAAP P/E is 37.4% lower than the 14.09x industry average.

For the fiscal third quarter that ended on September 30, 2024, BCS’ total income stood at £6.55 billion ($8.21 billion), up 4.6% year-over-year. Additionally, its attributable profit and earnings per ordinary share increased 22.8% and 28.9%, respectively, from the prior-year, reaching £1.56 billion ($1.96 billion) and 10.70p.

For the quarter ending December 31, 2024, BCS’ revenue is expected to increase 7.4% year-over-year to $7.59 billion. Its EPS for fiscal 2024 is expected to rise 8.6% year-over-year to $1.47. The stock has gained 83.5% over the past year to close the last trading session at $12.97.

BCS’ POWR Ratings reflect a favorable outlook. It has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.

It has a B grade for Growth, Value, and Sentiment. It is ranked first in the Foreign Banks industry. To see BCS’ Momentum, Stability, and Quality ratings, click here.

Deutsche Bank Aktiengesellschaft (DB)

DB is a stock corporation that provides corporate and investment banking, as well as asset management products and services, to private individuals, corporate entities, and institutional clients in Germany, the United Kingdom, the rest of Europe, the Middle East, Africa, the Americas, and the Asia-Pacific. It operates through the Corporate Bank, Investment Bank, Private Bank, and Asset Management segments.

In terms of forward Price/Sales, DB is trading at 1x, which is 69.6% lower than the 3.29x industry average.

DB’s total net revenues for the fiscal third quarter ended September 30, 2024, increased 1.3% year-over-year to €7.50 billion ($7.81 billion). The company’s profit attributable to shareholders rose 41.7% from the prior-year quarter to €1.46 billion ($1.52 billion). Additionally, its EPS reached €0.81, marking a 44.6% year-over-year increase.

Street expects DB’s revenue for the quarter ending December 31, 2024, to increase 6.5% year-over-year, reaching $7.71 billion. Over the past year, the stock has gained 34% to close the last trading session at $16.20.

DB’s POWR Ratings reflect its bright prospects. It has an overall rating of B, which translates to a Buy in our proprietary rating system.

DB has a B grade for Value and Stability. It is ranked #5 in the Foreign Banks industry. To access the additional ratings of DB for Growth, Momentum, Sentiment, and Quality, click here.

What To Do Next?

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C shares were trading at $70.73 per share on Monday morning, up $0.89 (+1.27%). Year-to-date, C has gained 42.62%, versus a 27.33% rise in the benchmark S&P 500 index during the same period.

About the Author: Abhishek Bhuyan

Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments. More...

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