10 Bank Stocks Under $5 With Up to 91% Upside

2. Popular, Inc.

Shares of Popular Inc. (BPOP) of Hato Rey, Puerto Rico, closed at $2.79 Wednesday, down 5% from a year earlier. Based on the consensus price target of 4.40, the shares have 58% upside potential.

The company had $38.7 billion in total assets as of March 31, operating over 180 branches in Puerto Rico, with eight branches in the Virgin Islands and one branch in New York.

Popular owes $935 million in TARP money, having converted the preferred shares held by the Treasury to trust-preferred shares in the third quarter of 2009.

First-quarter net income to applicable to common stock was $9.2 million, or a penny a share, compared to a loss of $85.1 million, or 13 cents a share, in the first quarter of 2010. The provision for loan losses declined to $75.3 million, from $240.2 million a year earlier.

Pre-provision net revenue for the first quarter was $232.7 million according to SNL, increasing 41% from a year earlier, mainly because of the expansion from the purchase of the failed Westernbank from the FDIC in May 2010, which strengthened Popular's leading position in its home market.

Derek Hewett of KBW rates the shares "outperform" or "buy," with a $4.50 price target, saying that his firm believed that Popular would "not need to raise new common equity when they eventually return TARP."

Joe Gladue of B. Riley also has a buy rating on the shares, with a $4.75 target, saying in an April 26 report that "the company has solidified its capital base, and it appears to be turning the corner on asset quality," and that his price target for Popular is "based on a 12.5x multiple applied to 2012 EPS estimate of $0.41 discounted back to March 31, 2012."

Four of the five analysts covering Popular rate the shares a buy. The remaining analyst has a neutral rating.

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