Bank Stocks May Still Rise, Says Jim Cramer
Jim Cramer believes that there is still potential for bank stocks to grow, following a strong performance this past year. However, he advises against purchasing shares just before earnings reports come out later this month. Club holdings, Wells Fargo and Goldman Sachs, reached record highs in 2025, increasing by nearly 36% and 57%, respectively.
Cramer points to beneficial regulations from the Trump era as a reason for further upside in these stocks. “There’s real momentum in this group,” he mentioned during Monday’s “Squawk on the Street.” He suggests that the current government has a more favorable approach than the Biden administration towards banking regulations. For instance, in November, a federal banking agency pushed forward a plan to relax capital requirements for larger banks, allowing institutions like Wells Fargo and Goldman Sachs to lend more and distribute higher dividends.
The easing of regulations could also lower compliance costs, which Cramer notes would serve to boost bank profitability. Additionally, the current administration’s stance on antitrust matters could favor Wall Street investment banks, with Goldman Sachs specifically poised to benefit as the recovery in investment banking grows. If regulators permit more mergers and acquisitions, it could lead to increased business for Goldman. Wells Fargo, while smaller in this area, still has a trading business.
However, the loosening of rules doesn’t come without risks. The capital requirements being challenged were put in place after the 2007-2008 financial crisis to reduce the likelihood of a major bank failure. Similarly, antitrust laws exist to protect consumers from monopolistic practices and price manipulation.
Despite these concerns, Wall Street analysts remain optimistic. Barclays recently raised its price targets for both Wells Fargo and Goldman Sachs, now at $113 and $1,048 respectively. Analysts are confident in both companies, believing they have significant room for growth. “Given the favorable capital market/regulatory backdrop and economies of scale, we believe more opportunities lie ahead,” they remarked, projecting double-digit earnings growth for the sector in 2026.
While there might be potential for gains, it’s important to approach cautiously. The investment club advises members to hold off on increasing positions in either stock ahead of upcoming financial disclosures. Financial stocks can react strongly to quarterly results and comments from management. For example, JPMorgan had better-than-expected earnings last October but saw its stock drop nearly 2% following cautious remarks from CEO Jamie Dimon about the economy.
Wells Fargo is set to release its fourth-quarter earnings on January 15, with Goldman Sachs following in the next session. For those in Jim Cramer’s CNBC Investment Club, trade alerts are sent before any stock transactions, with a waiting period before execution. This provides a bit of a buffer for informed trading decisions.
