Its earnings season again! That’s a good thing. Earnings just might save the day in an otherwise confusing and uncertain market. Meanwhile, Citizens Financial Group, Inc. (CFG) is a regional bank I like. Its stock just soared to a new 52-week high, notes Tom Hutchinson, editor of Cabot Income Advisor.
The market is causing whiplash. The Iran peace deal changed things. Stocks that had been held back by high oil prices, and the resulting higher inflation and interest rates, reignited as oil prices came back down after the peace deal. But hostilities with Iran have resumed.
Citizens Financial Group Inc. (CFG)
That sounds like it should be a bigger problem than it’s been in the market so far. Falling oil prices enabled previously beleaguered stocks to soar higher again. But that rally could end abruptly if oil prices spike higher again.
Meanwhile, another earnings quarter is upon us. Big banks kicked it off. Overall average S&P 500 Index (^SPX) company earnings are predicted to grow 23.3% over last year’s second quarter. That would be the second quarter in a row with average earnings growth of over 20%. A quarter that good or better could rally stocks regardless of what happens with Iran.
As for CFG, it has returned more than 23% year-to-date while the financial sector returned just 2.3% over the same period. Strong growth prompted a rise since the beginning of June. Revenue grew 12% and earnings per share grew 47% in the most recent quarter. A strengthening economy going forward would add fuel to the upward trajectory.
Recommended Action: Buy CFG.
