Should You Buy, Sell, or Hold Ally Financial Stock?
Monday, 18 March 2024, 10:45
Ally Financial Stock: Buy, Sell, or Hold?
Shares of this leading digital bank are surging. In the past five years, the S&P 500, including dividends, produced a total return of about 100%. That's a very admirable result that investors who pick single stocks should try to outpace.
The case for buying and holding
- Leading Digital Bank: Ally stands out with 11 million customers and various services.
- Capital Allocation: Favorable dividend yield and buyback programs enhance shareholder value.
- Deposit Growth: Increasing retail deposits and higher savings rates boost funding resources.
The case for selling
- Cyclical Nature: Interest rate fluctuations and automotive industry exposure pose risks.
- Financial Performance: Pressure on margins and increasing defaults impact profitability.
Owning a company that experiences cyclicality, while having heavy exposure to a single industry and product, might be enough of a reason to pass on the stock. In fact, this is how I view the situation. I believe the bearish arguments are more compelling than the bull case.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.