Energy and finance will be the main burdens in 2022

Last year surprised many investors as 2021 was the reverse of 2020 in terms of leading market sectors. The three worst-performing S&P sectors in 2020 (Energy, Financials, and Real Estate) reversed course last year and emerged as the top three performers, as you can see below.

Image Source: Zacks Investment Research

An important caveat to this sector’s outperformance is that most of the energy and financial sector’s gains in 2021 came in the first half of the year. From June to December, both sectors generally moved sideways, registering only modest gains.

Image Source: Zacks Investment Research

Although this relative poor results in the second half of the year can be assessed negatively, both sectors could simply rest after starting exceptionally well last year. Energy and financials lead the way on the first trading day of the year and appear poised to return to another level of growth. The sector’s consolidation over the past six months appears to be paving the way for a repeat of the outperformance in the first months of 2022.

With bond yields soaring today, we’ll focus on two financial stocks that are breaking even. The Zacks Finance sector is currently #1 out of all 16 sectors. Investing in top sectors and industry groups provides a constant tailwind to your investing success.

Jefferies Financial Group, Inc. (JEF)

Jefferies Financial Group is a global financial services company engaged in investment banking and capital markets, merchant banking, and alternative asset management. JEF offers financial advisory, debt and equity underwriting, equity research, wealth management and corporate lending services. Jefferies Financial Group was founded in 1968 and is headquartered in New York, NY.

JEF is trading at an attractive valuation (10.1 forward P/E) and has exceeded earnings estimates in each of the last eight quarters. Zacks #1 (Strong Buy) JEF stock last reported September quarter EPS of $1.51, representing a surprise of +48.04% from the consensus estimate. JEF has delivered an average earnings surprise of +222.85% over the last four quarters, supporting the stock’s rise of approximately 65% ​​over the past year.

Jefferies Financial Group Inc. Price, consensus and EPS surprise

The analysts covering JEF have raised their full-year earnings estimates by 4.79% in just the last 30 days. The Zacks Consensus Estimate for 2021 is currently $6.34, up 139.25% from 2020. JEF is expected to release its final set of 2021 quarterly earnings today after the bell.

Bank of America Corp. (TANK)

Bank of America is a leading financial institution serving individual consumers, small and medium-sized businesses, and large corporations. BAC provides a full range of banking, investment, asset management and related products and services. Headquartered in Charlotte, North Carolina, Bank of America serves more than 66 million customers and operates approximately 4,300 retail financial centers.

BAC has topped earnings estimates in each of the last three quarters and is trading at a very reasonable Forward P/E of 12.73. The company surprises with average results for the four quarters of +22.79%. BAC last announced earnings in October, when the company saw EPS of $0.85, representing a surprise of +19.72% from the consensus estimate. BAC stock has consistently outperformed over the past year and is back above 55%.

Bank of America Corporation Price, Consensus and EPS Surprise

New branch openings along with improved digital capabilities should continue to support stock growth. BAC maintains a strong balance sheet and liquidity position and increased its dividend by 17% to 21 cents per share last year. The company’s $25 billion share repurchase plan was also renewed in October.

With a Zacks #2 Buy, BAC’s earnings are expected to grow nearly 5% in 2022. Given its solid fundamentals, BAC’s impressive performance is expected to continue when the company reports earnings on January 19^vol.

These two financial firms are poised to maintain the momentum as we start the new year on a strong note.

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