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Dr. Kris has two degrees from MIT because one just wasn't enough. Her life goal was to figure out the universe and having done that (at least to her satisfaction), she decided to tackle something even more difficult—the stock market. Applying the scientific method along with an insatiably... More
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  • Market Note: Semis, Banks, Brokers Achieve Lift-Off -- March 20 0 comments
    Mar 20, 2014 5:36 PM | about stocks: KRE, KBE, IAT, XLF

    March 20, 2014

    Despite the fact that the major averages were unable to break through recent resistance, several areas were on fire: banks (especially the smaller regionals), financial institutions (brokers in particular), and the semiconductors. The group-wide breakout action was reflected in the industry etfs. The Regional Bank etfs, KRE & IAT, gained the most with a 2% rise to hit new yearly highs. Next in line were the Semiconductor etfs, SMH & SOXX, followed closely by the Financial etf, XLF. (Note that all of these etfs pay a dividend currently yielding in the 1% to 1.5% range.) Most economists feel that it isn't a true rally without leadership in financials which, up until now, has been lacking. Today's breakout should be welcomed by the bulls as good news. (Note: On the flip side, the Transports have been lagging and selling pressure has been heavy--two signs that the road to rally may be filled with potholes.)

    I've been saying for a year that the regional banks have looked attractive and many of them still do. Culling through the plethora (26) of break-outs in this group today, the following are my picks based purely on technicals as well as P/E. (I looked at those with P/E's under 15 which is the historical average value of the S&P 500.)

    1. Fifth Third Bancorp: FITB: Closing price = $23.36, P/E = 11.4, Dividend Yield = 2.05%
    2. PNC Financial: PNC: Closing price = $86.63, P/E = 11.6, Dividend Yield = 2.03%
    3. Wells Fargo: WFC: Closing price = $49.03, P/E = 12.4, Dividend Yield = 2.45%
    4. Huntington Bancshares: HBAN: Closing price = $10.01, P/E = 13.7, Dividend Yield = 2.00%
    5. Regions Financial: RF: Closing price = $11.30, P/E = 14.3, Dividend Yield = 1.06%
    6. Wintrust Financial: WTFC: Closing price = $49.62, P/E = 14.9, Dividend Yield = 0.81%

    If any of these pique your interest, remember to research them for yourself before jumping on board.

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