There Are Still Some Financial Stocks Worth Considering

Unless you’ve been living in a cave, you know that there is total carnage in the stock market, especially within the financial sector. By the way, if you have been living in a cave, congratulations on a very astute real estate investment.

Anyway, bank and investment bank stocks are trading at empty shadows of their glorious past. It almost makes you pine for the dot com bust. Almost. But even amid all this mayhem, are there financial stocks which are left standing, more or less unhurt? or dare I say it, strong?

It turns out, yes, although you have to sift through a lot of muck. And what you do find are small to medium capitalization stocks. The fact that these stocks have held up and are actually going up in some instances while the market as a whole craters is a huge sign.

I’ve mentioned the power of relative strength a few times and this is yet another example.

I’m going to highlight just a few nice looking charts. Keep in mind that I’m evaluating them based on their technical outlook only. The first is Hudson City Bancorp (HCBK):

There is also PNC Financial (PNC):

The largest capitalization stock on the list, Wells Fargo (WFC) has seen some wild swings in price but it is showing a lot of resilience:

And finally, First Financial (FFIN):

These are just a few ideas to prove that even in the midst of absolute mayhem, there is always a few strong stocks that buck the trend. My bet would be that stocks like these would outperform their peers when things settle down (hopefully soon).

Stranger Than Fiction
You probably think that Paulson, Bernanke and a crack team of MBAs and PhDs huddled together in a grueling caffeine fueled session to come up with a plan which requires $700 Billion US dollars.

But the truth is stranger than fiction. The value of Troubled Assets Relief Programme [TARP] which is looking more and more like a TRAP, was pulled out of thin air.

According to an article in Forbes:

“It’s not based on any particular data point,” a Treasury spokeswoman told Forbes.com Tuesday. “We just wanted to choose a really large number.”

I guess a Bajillion dollars just didn’t sound as impressive as $700 billion.

And even stranger… McCain has decided to “suspend his campaign” to return to Washington and solve this mess. Despite the fact that he has been present for votes less than every other single senator. And despite that he hasn’t actually even taken the time to read the 3 page preliminary report put out originally by Paulson. But all this may be moot since before he arrived to rescue the day, the two sides came together in a compromise.

Comments

[D-D:]

WFC is a good bank. I am hoping its price will go down to 27 to create a buying opportunity.
valuestockinvestors.bl...

2008 Sep 26 08:12 AM

[13958:]

Well, you forgot USB..............good conservative bank & good credit lending policies

2008 Sep 26 11:27 AM

[Inzight:]

You mean UBS??

mining101.blogspot.com

2008 Sep 26 02:24 PM

[DownOnMyLuck:]

Also the Aussie bank Westpac (WBK)

2008 Sep 26 02:35 PM

[Ray Lopez:]

I hate to rain on anybody's parade, but if the news report today on Yahoo that WaMu had a run on the bank is true, then every bank that relies on fractional reserves--which means every bank in the world including WFC (a tough bank stock to short BTW--I got burned trying once!) is doomed. Got gold?

2008 Sep 26 04:29 PM

[whidbey:]

Going long here is madness at best. Yes, all of the stocks today have a certain case for buying, but the question is "where" to do the buy? I suspect we will see "many" more bank failures, the List today has 117 failures forecast, very polite, but likely wrong. The better guess is B credit ratings or less, are all candidates to go belly up; that is about 1600 banks. I think its is too risky, and too early. What if the FDIC or SIPC is unable to cover the fallen? They freeze accounts and or sell the firm. But god the mess and fear if securities decline during the administrative moves? The rich to buy is the rich to die.

2008 Sep 26 05:49 PM

[PeteK:]

Anyone wants to take a look at CATY & EWBC. ?
These 2 get good grades from ratings. Facts, they deal with mostly Orientals, and home foreclosures is almost unheard of within this community.

2008 Sep 27 06:26 PM

[somerville:]

Hi Ray, Sorry you tried to short WFC, Doesn't work too well. That bank is resilent! Buffet loves this bank. Adding more shares to his portfolio as we speak. This bank has been cash rich for number of years. Very wise when they reach out to buy other banks too. (and they kept their hands in their pockets during all this current craziness!) I actually worked there for 22 years. I was a lender and we gave out gold stars after someone qualified for a loan there! (only kidding!)
They have accumulated many nice deposit customers from Wamu and Wakovia I hear in the past few weeks.

2008 Oct 01 02:27 AM