3 Stocks To Consider In This Outperforming Sector

Forget about trade wars and inflation. One actor of the US economy is doing great, with stocks up 2.5% even before this week’s rally.

Schwab analysts even issued a collective “buy” call on these stocks, citing value and stability in the sector.

“Some (financial) segments benefited from rising interest rates, which allow banks to lend at higher rates and insurance companies to increase returns on collected policyholder premiums,” Schwab said in a new research note. “The economy has proven to be relatively resilient in the face of one of the most aggressive tightening cycles in history.”

On the risk side, company analysts cite trade wars and reduced consumer spending as issues that could hold back bank stocks. “If sweeping tariffs kick in and slow growth materially, financials could struggle as consumers pull back on spending, businesses reduce investment, and lending slows,” Schwab noted.

Other Wall Street watchers agree, adding that some banking sectors are looking better than others at the moment.

“Bank stocks have been relatively mixed, large-cap U.S. banks have held up better than smaller regional banks, which remain under pressure from credit tightening, CRE (commercial real estate) exposure, and flattened yield curves,” said Fabio Ruggeri, founder and CEO of MenthorQ, a trading technology company in Miami, Fla. “While the big banks benefit from scale, trading revenue, and global exposure, the regional banks are still digesting the fallout from last year’s rate shocks and deposit flight.”

Short-term Federal Reserve actions, along with significant industry risks that could split the sector, are also in play.

“If the Fed pivots later in the year and the yield curve begins to normalize, net interest margins could improve,” Ruggeri said. “But risks tied to CRE, credit quality, and deposit competition are still in play. Investors should expect continued bifurcation. Stronger names will pull away from the weaker ones.”

Here are the three best stocks to buy in this outperforming sector.

Three Bank Stocks to Play Right Now

With talk of tariffs and trade wars watering down the markets right now and multiple risk factors (and opportunities) on the table, which bank stocks make the most sense right now? Here’s a sector snapshot.

US Bancorp 

The fifth-largest bank in the country, US Bank USB, saw its shares fall in 2025, down 20.1% year-to-date. Yet sector analysts are buzzing over the banking giant’s Q1 earnings beat, with multiple analysts backing the stock. On April 17, Barclays revised its price target for USB from $56 to $61 and maintained an “Outperform” on the stock. Noting that Q1 had beaten expectations, Barclays said USB impressed with more substantial fee income, more robust net interest income, and a better grip on expenses.

“I do like U.S. Bank right now,” said David Capablanca, a veteran trader and founder and host of the Friendly Bear Podcast. “Like many of the major banks have had a pullback, it’s an opportunity to dip buy. And you don’t just buy all at once – plan to scale in over three to six months, average in once a month.”

Consequently, if the stock is going lower, you’re averaging in, and if it’s consolidating and rising higher, you’re still gradually getting into a good position in USB stock. “It’s a very low-risk strategy to average into a safe, big-name bank stock,” Capablanca added.

Morgan Stanley

Morgan Stanley MS is another big bank stock that has been trending downward but appears to be in bounce-back mode.

Like other big banks, Morgan Stanley has been recording significant gains in trading revenue lately. Its trading desk works closely with large institutional investors to manage portfolio risk and look for opportunities before and during this year’s tariff skirmishes. All in all, Morgan Stanley said its trading revenues were up 45% in Q1.

“Morgan relies less on traditional banking and focuses more on affluent wealth and investment exposure, which usually leads to diversified earnings,” Ruggeri said. Toss into the mix a healthy dividend of 3.39% in mid-April, and Morgan Stanley seems like another bank stock loaded with opportunity right now.

JPMorgan Chase

JPMorgan JPM shares are performing better than their sector competitors but are still down 3.2% so far in 2025. However, they are up 27% over the last year and have a strong history of stable management and reliable share performance.

“JPM is the gold standard of large U.S. banks,” Ruggeri said. “It has a strong balance sheet, diversified revenue, and deposit resilience.”

Other market experts agree.

“JPMorgan Chase continues to stand out — not just as a big bank, but as a highly disciplined and forward-thinking institution,” said Christopher Migliaccio, founder at Warren and Migliaccio, LLC, a law firm that handles asset management issues for its clients.

JPM’s most recent quarterly earnings showed the investment banking behemoth easily beat analyst expectations while boosting guidance on consolidated net interest income by $500 million, a metric that banking industry analysts have historically cited as key to overall future earnings.

USB is on board with JPM, hiking its price target from $277 to $305, citing higher Q1 earnings, larger trading revenues (for the same reasons as Morgan Stanley), and a strong dividend yield (2.41%).

Takeaway On Bank Stocks

Capablanca offers specific advice for regular investors seeking opportunities in the banking sector.

“Just don’t go for the higher-risk banks,” he advised. “Stick with the big ones, like Bank of America, U.S. Bank, Schwab, and JPMorgan. The big ones are the safest bets out there.”

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Editorial content from our Expert contributors is intended to be information for the general public and not individualized investment advice. Editors/contributors are presenting their individual opinions and strategies, which are neither expressly nor impliedly approved or endorsed by Benzinga.

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