Bank of America has expanded into several new U.S. markets, with scale across the country positioning it ideally to benefit from accelerating loan growth over the next two years. Moreover, unlike smaller peers, scale allows the bank to increase investment substantially over the next few years without notably jeopardizing returns, driving further market share gains.
Banks almost regardless of size, are a solid idea as the potential for higher net interest income (NII) on portfolio loans to homeowners, farmers and small business owners. NII is one of the strongest tailwinds provided to financial firms in a risingate environment, as they can achieve better returns on their cash balances while achieving higher rates of returns from customers who come in for loans.
Shareholders receive a 2.13% dividend. The Barclays target price is $58, and the consensus price target on Bank of America stock is $51. The shares traded at $39.60 on Wednesday.
Marsh & McLennan
Typically, insurance companies are not affected by increases in interest rates, and this is one of the strongest companies in the industry. Marsh & McLennan Companies Inc. (NYSE: MMC), a professional services company, provides advice and solutions to clients in the areas of risk, strategy and people worldwide.
Its Risk and Insurance Services segment offers risk management services, such as risk advice, risk transfer and risk control and mitigation solutions, as well as insurance and reinsurance broking, catastrophe and financial modeling, and related advisory services, and insurance program management services. This segment serves businesses, public entities, insurance companies, associations, professional services organizations and private clients.
The Consulting segment provides health, wealth, and career consulting services and products. It also offers specialized management, as well as economic and brand consulting services.
Shareholders receive a 1.26% dividend. The $175 Jefferies target price is higher than the $171.77 consensus target. Marsh & McLennan stock traded on Wednesday at $169.75.
Mastercard
This continues to be one of the top credit card players in the world. Mastercard Inc. (NYSE: MA) is a global payments provider that operates one of the largest payment processing networks, connecting billions of consumers, millions of merchants, and thousands of financial institutions in more than 210 countries. Its brands include Mastercard, Maestro and Cirrus.
The company also provides value-enhancing offerings such as loyalty and rewards programs, information services and consulting. According to Nilson estimates, Mastercard is the third-largest global credit and debit network, as measured by volume.
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