To The Moon

$JPMorgan Chase(JPM)$ $Capital One(COF)$ $First Citizens BancShares(FCNCA)$ $HSBC Holdings PLC(HSBC)$

Warren Buffett once said: "Only when the tide goes out do you discover who's been swimming naked."

The recent US banking crisis is a perfect example of this phenomenon. Banks such as $SVB Financial Group(SIVBQ)$, $Signature Bank(SBNY)$ of New York and $Credit Suisse Group AG(CS)$ went bankrupt or were sold off, but some well-capitalized banks benefited.

But while this crisis has investors looking terrified, the storm will pass unbeaten, and the strong stocks left behind will come back even stronger. To put it simply, in this U.S. banking crisis, some people will suffer while others will benefit. The task of investors is to find out the winners.

Today we try to screen out the stocks that may benefit the most from 3 aspects of resources consolidation, valuation and innovation.

Banking is essentially a zero-sum game. When the weaker banks fell, the stronger banks swallowed them up through industry consolidation, and the result was that the stronger ones became stronger.

1. $JPMorgan Chase(JPM)$ has been a big beneficiary of this trend, as the bank has turned this crisis into its own opportunity.

Monthly chart

In May, the company acquired the failed $First Republic Bank(FRCB)$ with the assistance of the Federal Deposit Insurance Corporation (FDIC). In addition, under the leadership of CEO Jamie Dimon, the bank's return on equity rose to 16.02% in the past year, while the industry average was only 12.05%. Also, shares of JPMorgan are up 3.79% year-to-date, while bank stocks are down 12% over the same period.

2.In terms of market consolidation, the biggest winner may still be $First Citizens BancShares(FCNCA)$ .

With the help of the FDIC, the bank bought the failed $SVB Financial Group(SIVBQ)$ at a very low price. After the announcement of the acquisition, the stock price has risen more than 100%.

Monthly chart

Wrong valuation: When a crisis hits Wall Street, there are mud and sand, and many good stocks are also wrongly killed. The most typical example is $Amazon.com(AMZN)$ during the dotcom burst, the stock price plummeted by more than 90%.

3.This time is no exception, and the bank stock that was wrongly valued this time is $Capital One(COF)$.

Monthly chart

The bank's sales are expected to continue to grow year-on-year, while the static price-earnings ratio has dropped sharply to 6.37, only one-third of the valuation level of the $S&P 500(.SPX)$ . Perhaps it is this mismatch between valuation and fundamentals. The recently disclosed 13F position report shows that both Buffett and Michael Burry have built positions in this bank stock.

4.In addition, British bank $HSBC Holdings PLC(HSBC)$ has a strong balance sheet and reasonable valuations.

Monthly chart

Innovation: If you dig a little deeper, another beneficiary of this banking crisis may be $Apple(AAPL)$ . In 2019, with the help of $Goldman Sachs(GS)$ , the tech giant launched the credit card Apple Card, entering the financial services field. In 2023, Apple will also launch a high-interest savings account.