Top 3 Bank Stocks to Watch as Fed Rate Cuts Loom

According to the CME Fed Watch tool, the odds that the Federal Reserve will cut interest rates in July are only about 20%. However, those odds move to around 68% in September. And by October, many analysts factor in a 50% chance that rates will be 50 basis points (0.5%) lower than they are today. 

Investors are seeing that price action in the market today. Many investors want to position themselves ahead of the rate cuts so they can capture the gains. That’s a key reason why they’re climbing the wall of worry and buying stocks. 

Rate cuts will be bullish for the broader market. However, they could be particularly bullish for finance stocks, specifically bank stocks. That’s because higher interest rates impact the yield curve. 

The yield curve is a visual representation of the spread between long-term and short-term interest rates. When the Federal Reserve cuts rates, short-term borrowing rates move lower. But longer-term interest rates (e.g., Treasury yields) may stay firm or may even rise on the expectation of higher inflation or more growth. 

That means the yield curve steepens. That’s likely to be bullish for these three banks that benefit when their net interest margin (NIM) expands.

Fifth Third Bancorp Stock: Rate Cuts Will Help Already Expanding Margins

In Fifth Third Bancorp’s (NASDAQ: FITB) first-quarter earnings report, the company cited that its NIM had expanded for the fifth consecutive quarter. Much of that was due to the company’s diversified loan portfolio, which is reflected in the bank’s average loan portfolio being up 3% sequentially and year-over-year (YOY). 

Another bullish sign for the company is that some of that loan growth is taking place in the mid-market commercial space. Elevated interest rates have weighed down this area, but it’s also one of the areas with the most growth potential when rates begin to move lower.

The quality of Fifth Third’s loan portfolio is reflected in its Common Equity Tier 1 (CET1) capital ratio of around 10.5%, which is 36% higher than the 7.7% ratio requirement. The company’s recent announcement to buy back up to 100 million shares adds to the bullish outlook for FITB stock. 

The Fifth Third analyst forecasts on MarketBeat have a consensus price target of $47.53 on the stock. That's a 17.4% increase, along with a dividend yield of 3.66%, and has increased for 14 consecutive years. 

Comerica Stock: Its Biggest Risk Could Turn Into a Big Reward

Comerica Inc. (NYSE: CMA) is one of the nation’s most asset-sensitive banks. That means its earnings rise quickly when loan yields increase faster than deposit costs. The opposite is true as well. Muted loan activity is one reason earnings per share (EPS) are down YOY.

The company expects that to change in the second half of the year, especially in some key markets. However, management remarked that it still projects full-year 2025 average loans to be down between 1% and 2%.

Like Fifth Third, Comerica has a strong CET1 ratio of 12.5%. This should stabilize the top and bottom lines while the bank waits for loan activity to increase.

EPS is expected to grow by over 9% this year. That may not be fully priced into CMA stock. Analysts give the stock a consensus price target of $61.95, which is a 7.3% gain. Comerica also offers a high-yield 4.92% dividend.

Citizens Financial Group Stock: The Bank Is Positioned for Lower Rates

In the last several quarters, Citizens Financial Group Inc. (NYSE: CFG) has been proactive in repositioning its balance sheet away from low-yield securities and into higher-yielding commercial loans. That should increase earnings growth when rate pressures abate.

The bank’s CET1 ratio of 10.6% also reflects its solid financial position. Analysts are projecting EPS growth of around 27% in the next 12 months. That's nearly three times CFG stock’s forward price-to-earnings (P/E) ratio of around 10x.

A spread like that is one reason to believe CFG stock could be undervalued. Another could be the bank’s announcement that it was increasing its share buyback authorization to $1.5 billion.

The CFG analyst forecasts on MarketBeat give the stock a Moderate Buy rating with a consensus price target of $47.89, which is just below its 52-week high. Citizens Financial also has a solid dividend with a current yield of 3.93%.

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Uber and Tesla Surge on Robotaxis, Analyst Touts Texas Rides

In a big week for robotaxi bulls, Uber Technologies (NYSE: UBER) and Tesla (NASDAQ: TSLA) officially began their automated ride-sharing operations in two key geographies. Both these names saw strong gains in their shares as a result.

On June 24, Uber closed up over 7%. On June 23, Tesla shares ended the day up over 8%. The analysis below will detail the robotaxi progress that both firms have made, as well as the current state of the market.

Uber Kicks Off Service in Atlanta as Lyft Waits in the Wings

In partnership with Waymo, a subsidiary of Alphabet, Uber launched its autonomous ride-hailing service in Atlanta, GA. Atlanta has become a bit of a hotbed for autonomous ride-hailing. Uber’s main competitor, Lyft (NASDAQ: LYFT), also plans to launch its service in Atlanta this summer. Uber’s faster robotaxi release compared to Lyft also highlights the company’s trend of beating competitors to the punch. The firm rolled out its Austin robotaxi service in March, edging out Tesla by around three months.

These leading rollouts could be a significant competitive advantage for Uber. Consumers are still feeling a considerable amount of trepidation when it comes to using robotaxis. The May 2025 Electric Vehicle Intelligence Report found that 71% of the 8,000 U.S. consumers it surveyed are unwilling to ride in a robotaxi. The report notes that one of the main sources of concern among those surveyed is safety. Entering the market first could allow Uber and Waymo to prove that their services are safe and reliable. Establishing a positive reputation would make consumers less likely to try options from later entrants.

Another notable positive for Uber is that the company ranked highly on the report’s “View Intensity Score." The score measures the positive or negative perception of a company’s autonomous/self-driving services among consumers. Uber ranked second-highest out of eight companies, with an 18% net positive view and a score of three. However, Lyft was not far behind, with a 17% net positive view and a score of two. This comes even though Lyft has yet to actually begin robotaxi operations.

Tesla’s Rollout Addresses Key Concern, Receives Endorsement from Top Analyst

In Austin, TX, Tesla began its robotaxi service on June 22. The launch is a measured one, with the service kicking off rides to only a small group of influencers and investors. Still, it marks the first time that the auto company’s vehicles have carried paying riders without a human driver, according to Reuters. However, the vehicles are still accompanied by a human “safety monitors," but the amount of control they exerted over the rides is unclear.

The inclusion of safety monitors makes a lot of sense; however, it is important to consider consumer concerns regarding autonomous ride-hailing. The Electric Vehicles Intelligence report found that the lack of a human presence was the biggest concern among those it surveyed. Specifically, 36% of respondents expressed a concern about “a lack of human judgment that’s needed for driving.” Additionally, 32% of respondents cited the lack of available human help if something goes wrong as a concern.

A positive review of the service came from Wedbush’s Managing Director, Global Head of Technology Research, Dan Ives. Ives sent members of his team to participate in the launch. Ives called the experience a “10 out of 10." Ives believes the service will extend to 25 to 30 cities in a year from now. Still, investors may want to take Ives's perspective with a grain of salt. His recently released Dan Ives Wedbush AI Revolution ETF (NYSEARCA: IVES) holds an over 4% weighting to Tesla, which could possibly skew his view to the bullish side. Going from a small-scale initial launch with significant caveats to a country-wide service will be much easier said than done. Reports of Tesla’s robotaxi vehicles driving erratically have already surfaced. The National Highway Traffic Safety Administration has contacted the firm for more information.

Robotaxi Industry Remains in Early Stages, But the Wheels Are Turning

Overall, the robotaxi industry still has a long way to go, but things are moving in the right direction. Investors should pay close attention to how consumers are reacting to these rollouts. Safety remains a top concern. How consumers perceive the safety of these companies’ services will likely play a significant role in their overall success.

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ASML Keeps Buying Back Its Own Stock—Chasing Discount and Upside

The technology sector in the United States stock market has become one of the most institutionalized spaces today, with significant funds and “smart money” concentrated in a few names within the semiconductor and chipmaking industries. Given this context, investors cannot rely on the tools they once used for their analysis, such as charts and news; they now need to get inside the heads of these institutions.

Doing this requires retail investors to analyze some of the tools used by these institutions, which will be broken down in order to spot the underlying opportunities present in shares of ASML Holding (NASDAQ: ASML).

These opportunities are created by a discounted price action as the bulk of the attention (and capital) has gone into other names in the space. However, that is where the best upside usually comes from.

By comparing ASML stock to that of other peers in the space, such as NVIDIA Co. (NASDAQ: NVDA) and Taiwan Semiconductor Manufacturing (NYSE: TSM), investors can gain insight into what these institutions may be considering and where the true upside may lie.

More than that, it also justifies the reasoning behind ASML management buying back so much of its own stock.

What Insiders Did for ASML Stock

It’s no secret that ASML management has been buying stock for the past 12 months consistently. However, it seems that the month of June has seen a spike in this activity as if expecting big things to come down the line for the price and the company’s valuation.

During the last two weeks of June 2025, management was reported to have purchased up to 92,654 shares of ASML in the open market, and the average purchase price would have increased this transaction to a value of as much as $61.4 million. This figure represents a substantial portion of the company’s free cash flows, making it matter all the more.

Insiders typically only buy this much stock in such a short period of time for two reasons. First, they believe that the company itself is cheap enough to buy using the business’s own capital reserves to show commitment, and second, there may be an expectation for higher prices in the near future.

It tuns out, these insiders were not alone in this decision. Institutional buyers from Voya Investment Management also justified a new stake of $14 million in ASML stock as of mid-June 2025, demonstrating confidence and alignment with the insider thesis for the company’s future higher valuations.

Breaking the ASML Deal Down

Now that investors have reviewed the capital flows, it is time to justify these decisions using the kind of thinking and tools that these institutions typically look for. It all starts with spreading price action and valuation metrics to understand the story behind a stock’s current placement.

In terms of price action, ASML still trades within a deep bear market, as it remains at only 68% of its 52-week high level, while NVIDIA and Taiwan Semiconductor both trade at new 52-week highs. This performance gap could be (and should be) closed eventually.

Knowing that the only difference between ASML and these two peers is mostly how popular it is among market participants, investors on the retail and institutional sides can both deduce that, fundamentally, there is no reason for ASML to be trading this low.

Furthermore, investors can identify a significant discrepancy in valuations between ASML and Taiwan Semiconductor. These two companies are closer peers in terms of how they manufacture equipment and technology for chipmaking, so comparing their valuations provides a more accurate assessment.

This is where investors can nail the question behind all the insider buying.

Taiwan Semiconductor stock trades at a 52-week high, which is now known, but it is also valued at a forward P/E ratio of 21.1x as of today.

Now, ASML, while trading at a significant discount (price-wise), has a forward P/E that commands a premium over Taiwan Semiconductor at 23.0x.

Logically, if the valuation multiples are this close, then the stock price (relative to 52-week highs) should be as well, yet it’s not. This is where the story begins to make sense as a favorable buy-in for ASML stock over the coming months and quarters, and likely the reasoning used by institutional buyers who have recently started getting into the name.

More than that, on a price-to-sales (P/S) ratio, ASML now trades at 16.0x to be significantly above Taiwan Semiconductor’s 7.2x multiple. This can be seen as a sign that the market is experiencing significant quality and growth in the future, with ASML sales surpassing those of Taiwan Semiconductor.

Now, the catalyst to close this price gap is only a matter of time.

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