Updated with information on Wells Fargo.
NEW YORK (
has identified a select list of
10 actively traded bank stocks with the most upside potential for 2012
Using data provided by SNL Financial, we pared down the list of roughly 900 publicly traded U.S. bank and thrift stocks to the 157 names with average daily trading volume of more than 50,00 shares. Then we isolated the 10 with the most upside based on mean price targets among analysts polled by FactSet, while only including names that are rated buys by a majority of analysts.
This approach excludes some of the best-known bank stocks, including
Bank of America
(BAC - Get Report)
, which was heavily discounted, with shares trading for just 5.6 times the consensus 2012 earnings estimate of 99 cents a share, and 0.43 times tangible book value at Friday's closing price of $5.72, according to SNL Financial. The shares have 66% upside potential based on the consensus 12-month price target, but less than half of the analysts covering Bank of America rate the shares a buy.
is also excluded from the list, since the shares "only" had 21% upside as of Friday's market close, with a closing price of $26.91 and a consensus price target of $32.57.
JPMorgan Securities analyst Vivek Juneja is
quite enthusiastic about Wells Fargo
, reiterating on Wednesday his "Overweight" rating on the shares, with a $41 price target.
The analysts have certainly been "early" on many picks, especially for the largest U.S. banks, with mortgage woes and a continued regulatory onslaught, including enhanced Basel III capital requirements and the latest round of Federal Reserve stress tests set for next month, which will feature a
particularly nasty set of economic assumptions
At some point, the political pendulum will swing the other way, and investors who have been building long-term positions in Bank of America and the rest of the "big four" U.S. banks will make loads of money. Two of the big four members are included in the following list.
The list is fairly diverse, including some relatively small players and two holding companies that still owe money to the government for bailouts received through the Troubled Assets Relief Program, or TARP.
Here's the select list of 10 bank stocks with the most upside for 2012, ordered by ascending upside potential: