With the recovery in economic activity and increased capital market activity, this year’s financial sector saw a solid recovery. The Fed will likely raise interest rates very soon, which should help financial stocks. We believe this is the best time to buy fundamentally sound financial stock. Capital One Flagstar Bancorp, (NYSE:) Financial Capital Bancorp (NASDAQ:). So, let’s discuss these names.The finance and banking sector was hard hit last year due to the COVID-19 pandemic. With the strong economic recovery driving an increase in banking transactions, and greater capital market activities than usual, this sector has seen a rebound. The sector has grown to account for one-third of Fortune’s latest 100 Fastest-Growing Companies List, outpacing the technology sector.

The Fed’s signal that it will raise benchmark interest rates as soon as 2022 should further drive the financial sector’s growth. The odds of an interest-rate hike being possible are high, with the consumer price index increasing by 4% annually.

Investors’ interest in the finance sector is evidenced by the Financial Select Sector SPDR Fund ETF’s (XLF) 37.1% year-to-date gains, versus the broader SPDR S&P 500 ETF Trust’s (SPY) 22.6% returns. Hence, we think it could be wise to bet on financial stocks possessing solid fundamentals—Capital One Financial Corporation (NYSE:), Flagstar Bancorp, Inc. (FBC), and Capital Bancorp, Inc. (CBNK).

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