It feels like forever ago that financial stocks were the 2017 darling of Wall Street.
Banks and other financials, represented by the Financial Select Sector SPDR Fund (NYSEARCA:XLF), led the broader market higher with roughly double-digit gains from New Year’s through the start of March. However, they’ve lost nearly all of those gains since, with XLF underperforming by 1% to 7.8% year-to-date, and other financial funds such as the Vanguard Financials ETF (NYSEARCA:VFH) are sitting close to flat for the year.
That pullback has come over increasing uncertainty about when President Donald Trump & Co. will push ahead with tax reforms and financial deregulation that was expected to jolt financial stocks to life.
Patience, patience. This pullback represents an opportunity to buy a few solid names in the space that will materially benefit from a rising-interest-rate environment — and when and if we do get tax legislation and the gloves taken off financial institutions, that’s all the better.
From here, these three financial stocks offer plenty of runway.