3 Alternatives To JPMorgan Chase And Bank Of America

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Includes: FITB, HBAN, KEY
by: Karin Hernandez

With all the not-so-nice news over the past few years regarding the big banks like JPMorgan Chase (NYSE: JPM) and Bank of America (NYSE: BAC), I decided about two years ago that I didn't want anything to do with them, and I moved my banking services to Huntington Bancshares (NASDAQ: HBAN). I've been an extremely pleased customer ever since, so I thought I would take a look at it as an investment, and compare it with a couple of the other smaller banks in my area.

In my analysis, I tend to rely heavily on analyst opinion and estimates. I figure they have been studying the stock for a while and probably have a better handle on the numbers than I do. I do look at current news, as well, but I like to lean more on the numbers to provide an objective recommendation.

Huntington is currently trading at about $6.22, down 9% from its 52-week high of $6.83. It has a PE of 10.3 and pays a 2.6% dividend. The current analyst rating is a 2.6 (1.0 = Strong Buy, 5.0 = Sell) with a mean target price of $7.10. There are 5 Strong Buy recommendations, 2 Buys, 19 Holds, and 1 Underperform.

The full-year 2012 consensus estimated earnings is $0.63, which is 7% higher than the actual 2011 earnings of $0.59. The estimate for year-end 2013 is $0.67, 6% higher than year-end 2012.

The stock is up 14% year-to-date, and is exactly even with this time last year. The current estimate of annual growth rate for the next 5 years is 4.93%, compared with an industry average of 9.24% and a sector average of 10.39%.

Fifth Third Bank (NASDAQ: FITB) is currently trading at about $13.39, down 9% from its 52-week high of $14.73. It has a PE of 8.8 and pays a 2.4% dividend. The current analyst rating is a 2.3 (1.0 = Strong Buy, 5.0 = Sell) with a mean target price of $7.10. There are 7 Strong Buy recommendations, 12 Buys, 12 Holds, and 1 Sell.

The full-year 2012 consensus estimated earnings is $1.49, which is 25% higher than the actual 2011 earnings of $1.19. The estimate for year-end 2013 is $1.51, 1% higher than year-end 2012.

The stock is up 6% year-to-date, and is up 12% from this time last year. The current estimate of annual growth rate for the next 5 years is 4.95%, compared with an industry average of 9.24% and a sector average of 10.39%.

KeyBank (NYSE: KEY) is currently trading at about $7.50, down 15% from its 52-week high of $8.82. The PE is 8.5, and it pays a 2.7% dividend. The current analyst rating is a 2.7 (1.0 = Strong Buy, 5.0 = Sell) with a mean target price of $7.10. There are 4 Strong Buy recommendations, 8 Buys, 15 Holds, 4 Underperforms and 1 Sell.

The full-year 2012 consensus estimated earnings is $0.78, which is 10% lower than the actual 2011 earnings of $0.87. The estimate for year-end 2013 is $0.82, 5% higher than year-end 2012.

The stock is down 2% year-to-date, and is down 9% from this time last year. The current estimate of annual growth rate for the next 5 years is 8.32%, compared with an industry average of 7.23% and a sector average of 10.47%.

My target prices for these three stocks for year-end 2013 are: Huntington, $6.90. for an 11% gain; Fifth Third, $13.29, for a 16% gain; and Keybank, $6.97, for a 2% loss.

At this point, I recommend Fifth Third as a Buy. And I agree with Cramer, who recently called Huntington a Buy at under $6. If you can get it at $6 or less, that would increase the potential gain to 15%, which is my lower limit for a Buy Recommendation.

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