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Financials Stocks are Seeing More Big Money

By:
Lucas Downey
Published: Apr 10, 2024, 19:33 GMT+00:00

Market participation is persisting as strong growth and rising interest rates cause a rotation out of technology stocks and into more cyclical sectors.

Wall Street, FX Empire

In this article:

The new 2024 sector leaders are energy, industrials, and financials.

Cyclicals likely will play a larger role in driving this bull market’s next leg higher.

A reshuffled leaderboard shows investors favoring more cyclical areas:

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Let’s dig into the financials sector to see why it’s attracting the Big Money.

Financials stocks are seeing more Big Money buying in 2024 thanks to light institutional positioning in general after a long stretch of underperformance by the sector.

The Financial Select Sector SPDR Fund (XLF), which is full of S&P 500 financials companies, has soared in the past year thanks to Big Money inflows:

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There’s still room in most professional portfolios for higher exposure to the sector.

More to Financials than Banks

Banks are rallying due to better-than-expected economic growth. After the Federal Reserve eventually cuts interest rates, short-term bond yields will fall, steepening the yield curve, making bank lending more profitable.

Still, there’s a lot more to the financials sector than banks. For instance, the space includes Apollo Global Management, Inc. (APO), a global alternative asset manager. It’s had incredible sales and earnings growth recently:

  • 3-year sales growth rate (+153.2%)
  • 3-year EPS growth rate (+713%)

Source: FactSet

Big Money accumulation is driving APO upward. Each green bar signals unusual inflows:

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APO has been a top-rated stock at MAPsignals. That means the stock has unusual buy pressure and growing fundamentals. We have a ranking process that showcases stocks like this every week.

It’s made the rare Top 20 report numerous times. The blue bars below shows when APO was a top pick over the past year…rising higher as Big Money buys:

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Ramping with Big Money Support

Financials companies are improving amid strengthening capital markets, low default rates, and tight credit spreads.

The sector sports a healthy 11.4% estimated 12-month forward EPS growth rate. Plus, it’s the third-cheapest sector in the market, with a 12-month forward P/E of 16.

It’s a safe bet new sector leaders like financials will play a bigger role in driving this bull market’s next leg higher. Follow the flows with MAPsignals to learn more.

About the Author

Lucas Downeycontributor

Lucas is a well-versed equity investor and educator. He currently is co-founder of research and analytics firm, MAPsignals.com, which focuses on finding outlier stocks by following the Big Money.

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