Five Midget Banks I'm Watching

With the breathtaking run-up in larger banks like Wells Fargo (WFC) and Bank of America (BAC), many traders are now looking at the smaller, lower quality names in the banking sector for back-from-the-dead survival plays.

Above is a quick comparison I’ve put together of some of the second/ third tier banks, the ones with more regional exposure to construction loans, commercial real estate debt, etc.

Looking at the percentage discount they are trading at from their 52 week highs, the knee-jerk reaction would be that these names could “have room” for further gains.

But that’s why I’ve also included the percentage these stocks have already gained from their 52 week lows…while BAC, GS, and WFC have gotten a lot of the attention, there have been face-melting gains in these lower quality banks already.

Fifth Third (FITB) was probably the riskiest buy during the crisis, but the courageous have already been rewarded with a 900% return!

I haven’t done enough work on these five names yet to determine if any of them are worth the risk of a long position, but the action is definitely worth following, even if from the sidelines for now.

Full Disclosure: I am not currently long or short any of the above mentioned stocks in either personal or customer accounts. Nothing contained in this post should be considered investment advice, research or an invitation to buy or sell any securities. All data contained herein is publicly available and reflects the closing values as of 8/18/2009. Please see my Terms & Conditions page for a full disclaimer.

Comments

[stink726:]

Interesting article; thanks.

Aug 19 03:32 PM

[District Ba...:]

I realize that you post a caveat saying, "I have not done enough work on these 5 names..." - but how could you post this article without a single piece of fundamental analysis??

The closest piece of relevant info you posted is P/Book - which no bank investors look at (we all look at P/Tangible Book). If you have to ask the difference, you shouldn't be investing in any financials, and certainly not banks.

On what basis would you say that FITB was the riskiest buy?

Aug 19 04:53 PM

[Stewie:]

Come on, look at this guy's BIO. He is a career salesman, he is doing the best he can. This article is terrible and a complete waste of time.

Aug 20 06:37 PM