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

Big 4 Banks Could Offer 194% Returns: FBR

NEW YORK ( TheStreet)--Large cap banks are set to "rebound significantly" in 2012, following a year of "severe political and regulatory uncertainty," according to a report Monday from FBR Capital Markets.

Currently, JPMorgan Chase (JPM - Get Report), Wells Fargo (WFC - Get Report), Bank of America (BAC - Get Report)and Citigroup (C - Get Report) trade at 6.6 times 2012 earnings estimates and 0.9x tangible book value (TBV).

"On an earnings basis, a return to historical valuations would represent 86% upside, and on a TBV basis, the return could be as high as 194%," the report states.

"Valuations for large-cap banks are compelling, especially compared with their smaller brethren, who are struggling to stay relevant in a world barreling toward banking consolidation. We expect the tide to turn toward a Republican Congress and Administration and the political/regulatory overhang should be lifted as investors gain the confidence that additional punitive regulation is unlikely. In addition, when the investment community begins to show interest in the space, large-cap names should receive a valuation lift due to their attractive diversified revenue streams," the report states.

FBR's top picks among large cap names are Wells Fargo, PNC Financial (PNC - Get Report), U.S. Bancorp (USB - Get Report) and Fifth Third Bancorp (FITB - Get Report).

"We believe these companies will outperform given that each has a strong deposit base, has exhibited signs of loan growth, and has strong capital levels," the report states.

FBR also believes mortgage banking activity will outperform expectations in 2012, benefitting not just Wells, U.S. Bancorp and PNC Financial, but also JPMorgan Chase and Flagstar (FBC). FBR has an "outperform" rating on JPMorgan and a "market perform" rating on Flagstar.

-- Written by Dan Freed in New York. Follow this writer on Twitter.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $15.38 0.00%
C $49.88 0.00%
FITB $18.68 0.00%
JPM $60.81 0.00%
PNC $88.16 0.00%


Chart of I:DJI
DOW 16,472.37 +200.36 1.23%
S&P 500 1,951.36 +27.54 1.43%
NASDAQ 4,707.7750 +80.6910 1.74%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs