This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

High Risk Bank Stocks May Recover Sooner

By Chuck LeBeau, director of analytics at

In its January report, the IMF said: "Degradation is also occurring in the loan books of banks, reflecting the weakening outlook for the economy. Going forward, banks will need even more capital as expected losses continue to mount."

But in spite of facing huge loan losses rivaled only by those during the great depression some bank stocks might now be poised for recovery.

Coming to the aid of U.S. banks the Financial Accounting Standards Board recently relaxed mark-to-market accounting, which has been blamed for exacerbating banks' capital problems. The changes mean that banks can now value toxic assets by their own models rather than what they would fetch on the open market. Some analysts have calculated that the change could boost quarterly profits at some banks by up to 20 per cent.

Bank of America (BAC - Get Report) CEO Ken Lewis says that BofA is on track to achieve $30 billion in post-tax earnings by 2011. Some optimistic analysts agree with Lewis and point out that the worst may already be over and BofA may actually recover to match its 2006 high of more than $55. In the meantime the nearer term price targets are in the area of the January 2009 highs above $14. Unlike many smaller banks Bank of America appears to have adequate resources to weather the flood of loan losses that may be on the horizon. BAC made a low of $2.53 in February and has recovered to trade above $7.00 recently. The current SmartStop sell alert would occur if prices declined to $5.44.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
C $52.90 0.00%
BAC $15.64 0.00%
JPM $62.60 0.00%
STI $40.47 0.00%
WFC $54.70 0.00%


DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs