(List compiled by Andrew Dominguez. Data sourced from Finviz. Disclosure: Andrew Dominguez owns C and JPM shares.)
Investors seem to have written off bank stocks, after all, the industry has been one of the worst performing on the stock market this year.
But plummeting share prices can mean good deals for intrepid value investors, the bargain hunters of the finance world. And if the ultimate goal of an investing strategy is to buy low and sell high, then buying low is an important first step.
In our search for good deals out there, we came across this list of 10 bank stocks with “turnaround potential.” The author, George Putnam, and his team at The Turnaround Letter, believe that the following stocks present “very good long-term values” (via The Stock Advisors).
Putnam believes that the continuing spate of negative headlines about the banking industry will keep prices down in the short term. But he believes that the banks’ efforts to shed riskier activities to focus on less volatile businesses will allow the banks to return to stability and profitability. He foresees improving valuations, higher share prices, and increasing dividends and stock buybacks in the industry.
In compiling this list, Putnam and his team are focusing on banks with strong retail, commercial and investment banking operations, credit cards, and mortgages lending.
We ran a Kapitall Data Krunch on each of the companies in order to help you begin your own analysis of these stocks.
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List sorted alphabetically.
1. Bank of America Corporation (BAC): Banks industry with a market cap of $99.81B. It has strong franchises in retail and commercial banking, credit cards, and mortgage lending in the US. Its acquisition of Merrill Lynch during the crisis gave the company greater traction in the Wealth Management and investment banking sectors.
2. Citigroup, Inc. (C): Money centre Banks industry with a market cap of $112.8B. Citi, like BofA, has strong franchises in retail, commercial, and investment banking, including card services and lending. Citi, however, has operations in more than 160 million countries and jurisdictions.
3. Fifth Third Bancorp (FITB): Midwest Regional Banks industry with a market cap of $11.33B. It has a historically strong presence in the Midwest. Since its ill-timed expansion into Florida, the bank has re-shifted its focus back to its core market. Its main businesses include commercial banking, branch banking, consumer lending, and investment advising.
4. JPMorgan Chase & Co. (JPM): Money centre Banks industry with a market cap of $162.76B. It was one of the banks that performed best during the crisis, and has been mostly strengthened by its well-timed takeovers of Bear Stearns and Washington Mutual. Putnam believes JPM is currently the premier name in the banking industry. Its Chase brand of retail banks operates in 23 states. It also provides investment banking, retail financing, card, commercial banking, treasury and securities, and asset management services.
5. KeyCorp (KEY): Money centre Banks industry with a market cap of $7.86B. It is one of the biggest deposit collectors in Ohio and the state of New York. Through its KeyBank subsidiary, it provides retail and commercial banking, commercial leasing, investment management, consumer financing, and investment banking services.
6. PNC Financial Services Group Inc. (PNC): Money centre Banks industry with a market cap of $29.26B. It provides banking services throughout the nation, including retail banking, corporate and institutional banking, asset management, residential mortgage banking. PNC has a significant stake in Blackrock, an investment management firm. It also recently announced its purchase of Royal Bank of Canada’s US operations.
7. Regions Financial Corp. (RF): Southeast Regional Banks industry with a market cap of $7.55B. Its operations are concentrated in the South, Midwest and Texas. It provides commercial, retail, mortgage banking, investment banking, trust, mutual funds, securities brokerage, and insurance services.
8. SunTrust Banks, Inc. (STI): Money centre Banks industry with a market cap of $13.37B. Its operations are located in Florida, Georgia, and other Southeastern states. It provides deposit, credit, trust and investment services, as well as mortgage banking, asset management, securities brokerage, capital market services, and credit-related insurance.
9. Synovus Financial Corp. (SNV): Mid-Atlantic Regional Banks industry with a market cap of $1.57B. It provides commercial and retail banking, financial management, insurance and mortgage services through it Synovus Bank subsidiary in Alabama, Florida, Georgia, South Carolina, and Tennessee.
10. Zions Bancorp. (ZION): Pacific Regional Banks industry with a market cap of $4.23B. Its operations are concentrated in California, Nevada, and Arizona, which meant that it was exposed to some of the worst-hit real estate markets in 2008. It focuses on providing community banking services to small and medium-sized businesses and corporations. It also engages in services geared towards commercial and residential development, construction and term lending, retail banking, treasury cash management, residential mortgage, and trust and wealth management.
Interactive Chart: Press Play to see how analyst ratings have changed for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.