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By Neal Goodwin, Guest Editor

Banks have been on a rollercoaster ride ever since the mortgage crisis. If you are looking for stocks that have no risk, then this is not the best sector for you. Whipsaw returns in this sector are not for the faint of heart or for those with short investment horizons.

There is still fear that the repercussions for banks involving toxic mortgage debts will continue to hurt investment banks stocks, which have been taking a hit so far in the 2011 calendar year; however, this presents a very interesting and attractive buying opportunity for those that consider themselves bold investors.

Almost every investment bank is selling below fair value on a discounted cash flow basis at this time, which could result in great rewards for those bold shareholders who choose the winners carefully. One thing is certain in this equation: Uncle Sam is not likely to let its biggest and best investment bank stocks suffer too long, meaning these stocks are likely to see increases in the long run. Here is a list of the best investment bank stocks on the market now.

Goldman Sachs (NYSE:GS) has had some negative price momentum so far this calendar year, peaking at $175.34 in mid-January and bottoming out at just above $130 per share in May. GS's stock price has seen a slight increase since then, currently sitting around $137 per share, but what will it do from here on out? In general, the banking industry is on the rise as it is still recovering from the debt crisis.

Goldman Sachs tends to move with the market as it has a beta of 1.18. However, GS does not look like a stock with the most promising outlook in general based on its history. As a long term player, I expect GS to be fairly steady with similar returns to the market. One thought among gurus that's fairly unanimous is that GS is somewhat undervalued at this time. GS has a P/E of 15 and is expected to grow in the quarter from June to September at about a 25% rate, meaning nominal increases in the stock prices are expected, with the potential for a move to the $150-160 range. For the time being, GS is a hold, as it is under some legal scrutiny which may lead to devaluation in the expected market value of this stock. There is definite potential with this stock; however, the risk outweighs the potential reward at this point.

Morgan Stanley (NYSE:MS) has also been experiencing some negative price momentum, falling from around $31 in late February to around $23. MS is in a very similar situation to GS at the moment. MS is a little more advantageous, considering it is under less legal scrutiny right now than GS. The negative headline risk with Goldman may be collaterally dragging down MS, and for that it may be more poised for a recovery in price.

MS trades below book value, at 0.73 price-to-book, and should eventually see some increases leading to sustained higher prices. MS only has a P/E of 11.23 along with a 0.58 PEG ratio. Interested investors may want to wait as MS could see some more devaluation before correcting upward, but it appears to be nearing a bottom and thus, I give MS a long term value buy.

Bank of America Corporation (NYSE:BAC): Trading at $10.84, BAC is also experiencing negative price momentum, falling from its six-month high of about $15.20 in January. While BAC (along with all of these other big banks) is still suffering from its mortgage businesses, it is currently trading at about half of its book value. We may not see vast increases in the near future, but this stock appears to be a great long term buy.

BAC is expected to grow earnings by 24% over the full 2011 calendar year from 2010. Shares sport a forward P/E of 6.34, and could potentially see great returns by the end of the year as that multiple expands. Whether it is in the next month, 12 months, or next few years, BAC is bound to recover and increase considerably from its current market price. I give BAC a long term buy.

There is considerable risk in the short term that could dampen BAC's earnings power. BAC has considerable downside risk as a result of a number of pending and growing lawsuits regarding pay and foreclosures. BAC should be able to get past these, but if it ends up being in more legal trouble relative to what is now visible, it would likely be better to stay on the sidelines.

JP Morgan Chase (NYSE:JPM) is down almost 20% from its high in early April, but is considerably below book value. With a P/E of 9.32, a PEG of 0.95, and projected growth for the current calendar year of almost 25%, JPM has solid peripherals and is poised for an increase. It also has one of the better yields of these banks, supplying dividends of $1.00 for a yield of 2.4%.

Its net profit margin, return on assets, and return on investments are all close to or greater than double the industry average, showing a great organizational structure. Future outlook for JPM looks great and it appears to be an excellent long term buy, currently selling around $42. We think JPM offers an excellent options-based play.

Citigroup (NYSE:C) is walking to the same tune as the other big banks mentioned, having suffered drops in share value of over 20% since its high in late January. This is likely a result of overvaluation for the stock leading up to that high valuation, which lead to a subsequent devaluation of the price back to a more normal level. With that said, C is hovering at a level slightly below its book value currently.

Currently selling at $37.72, C should probably be valued somewhere in the mid-$40 range. With a P/E of 12.33, and earnings per share of 3.06 C definitely has room to grow in value. In terms of management effectiveness, C is below industry averages when it comes to net profit margin and return on assets.

By itself, Citigroup is a worthwhile stock to consider, based on its current undervaluation and share price below projected book value. It has been recovering since announcing a 10-to-1 reverse stock split in March, a move that pushed away many retail investors. This dropped the value of the stock considerably, and it appears to be close to a bottom. C is another buy among the investment banks.

Evercore Partners (NYSE:EVR) is actually the only stock on this list that has not seen a drop off in share price over the last six months. Its growth over the past year has been excellent, gaining nearly 20% in revenues and having an expected growth rate of almost 90% for the 2011 calendar year. EVR's share price has increased 23% over the last 12 months.

Evercore's P/E of 75.45 is high; however, if it is able to sustain the projected increase of 90%, this is not an alarming number. Along with a PEG of 1.40, its forward P/E is a much more attractive 14.07, suggesting sustainability. While it is not performing well below book value like our other investment bank stocks, EVR appears to be on an upward momentum path.

John Keeley recently increased his shares in EVR, and other analysts have given EVR a buy or hold rating. EVR has considerably less risk than the others, however likely a lower ceiling for increase in share value. Another attractive aspect of EVR is its 2% yield. Expect EVR to perform well in the near future, rebounding to levels closer to its 52-week high in mid-May of $37.26, a healthy increase as the stock is currently trading just about $33.

Greenhill & Co. (NYSE:GHL) may have had the worst 2011 of any of these stocks, plummeting from just under $85 per share to around $50. GHL has a P/E of 50 and a PEG of 2.39. Combined with an expected growth rate of only 28%, those ratios are worrisome, especially considering GHL experienced decreased revenue in fiscal 2010 compared to 2009, which was a dismal year for banking deals.

On top of that, net income has decreased approximately 50% in the last 12 months. GHL has been doing considerably less business this calendar year than last, only making six transactions in the first quarter in comparison with 46 deals in the previous four quarters. With that said, it is not all bad news. Many investors are confident that GHL's results will stabilize in coming quarters. Its 10 day trading volume is double that of its three month trading volume, and Rochdale's Dick Bove recently upgraded GHL from neutral to buy, giving them a $61 price target. GHL is currently trading at $52.36, and provides an impressive dividend and yield of $1.80 and 3.5% respectively.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.