Bank stocks in the U.S. have staged a nice recovery. The S&P Banks Select Industry Index is up 33% over the past 12 months, outperforming a 26% gain in the benchmark S&P 500 index over the same period. It’s a welcome recovery after bank stocks were hit hard during the pandemic and subsequent bear market of 2022. Banks have also struggled with high inflation and interest rates in recent years.
Several leading U.S. banks, including JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC), have seen their share prices rise more than 15% this year and appear to have momentum. However, not every bank is seeing its stock rise currently. Some banks, including many outside the U.S., are struggling with a host of problems and issues, making them stocks to avoid.
Here are three sorry bank stocks to sell in May while you still can.
Toronto-Dominion Bank (TD)
TD Bank Group (NYSE:TD) just reported a 20% year-over-year decline in its profit for what was the Canadian lender’s fiscal second quarter. Management blamed the profit decline on a one-time charge of $615 million related to an investigation in the U.S. over its failed anti-money laundering programs. The bank flagged that it anticipates additional financial penalties to be imposed on it by the U.S. Department of Justice.
TD has gotten into hot water stateside over charges related to money laundering that’s been tied to the illicit drug trade. If that weren’t bad enough, TD Bank also said that it is seeing a rise in credit card delinquencies and business bankruptcies, a situation it blames on persistent inflation and high interest rates. Over the past five years, the company’s share price has risen a slight 3%. However, TD is down 12% so far in 2024, making this a bank stock to sell.
Barclays PLC (BCS)
Now to England and British lender Barclays PLC (NYSE:BCS). One of the oldest banks in the world, Barclays began operations in 1690. The institution has survived a lot over centuries, but its share price is rarely as low as it is today. For much of the past five years, Barclays shares have struggled to remain above $5 and out of penny stock territory. BCS stock is up 40% this year, but the rise is due to news of a major overhaul at the lender.
Earlier this year, Barclays reported a net loss of $139.8 million for the final quarter of 2023. The loss was much worse than expected. The bank said that it took a $1.15 billion charge from structural cost-cutting measures. Along with the disappointing financial results, Barclays announced a major operational overhaul, including more cost cuts, asset sales, and a reorganization of its business divisions.
The bank will divide into five operating divisions going forward, separating the corporate and investment banking sides of the lender. Barclays said that it is targeting total cost savings of $2.55 billion by 2026. Today, BCS stock is trading 80% lower than where it was in 2007 before the global financial crisis.
Capital One Financial (COF)
Capital One Financial (NYSE:COF), most known for its credit cards, is one of the 10 biggest U.S. banks. The lender’s stock has been trailing the performance of other U.S. banks, having risen only 4% this year. The share price has been largely trading sideways since Capital One announced plans to buy rival Discover Financial Services (NYSE:DFS) for $35.30 billion in an all-stock deal.
The Discover acquisition will help Capital One expand its credit card offerings. Under terms of the agreement, Discover shareholders will receive 1.0192 Capital One shares for each Discover share they own. The companies said they expect the deal to close by early next year. After that, Capital One shareholders will own 60% of the combined company while Discover shareholders will own the remaining 40%.
The merger will further expand Capital One’s credit card offerings and its deposit base. COF stock fell 6% immediately after the company announced the Discover purchase, as analysts and investors greeted the acquisition with skepticism. Capital One comes up as one of the bank stocks to sell as its share price today is 20% below its all-time high reached during the last bull market in 2021.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.