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NEW YORK (
TheStreet) -- Bank stocks have been rallying in 2012 as investors chase beaten down stocks on the hopes that they will surge the most if macro-economic concerns ease.
In fact, bank stocks have gained so much in recent months that the sector is no longer
according to KBW analysts.
When it comes to the blue-chip financial stocks,
Wells Fargo(WFC - Get Report) enjoys the strongest valuations in the sector. The stock trades at 9.4 times its expected 2012 earnings per share and 172.6% of its tangible book value per share.
Wells Fargo's ROA has ranged between 1.11% and 1.27% over the past year, for the best and most consistent earnings performance among the "big four" U.S. bank holding companies. Its 2011 return on asset ratio of 1.28% is superior to that of
JPMorgan Chase(JPM), which generated a 0.86% return.
Wells' strong earnings beat in the fourth quarter of 2011 also has analysts convinced that it deserves its strong premium. With a growing share in the mortgages business and strong capital that gives it the flexibility to raise dividends or make acquisitions, the stock is now the gold standard among the big bank stocks.
So which stocks trade at a premium to Wells Fargo? Such stocks should presumably hold an equally consistent track record in profitability, have strong capital flexibility and show an ability to grow organically as well through loan growth.
TheStreet shortlisted five stocks, using Highline FI, that trade at a premium to Wells Fargo both on a price-to-2012 earnings ratio basis as well as on a price-to-tangible book value basis. While some stocks have been standout performers in the crisis, not all stocks might be able to justify their premium.
The following are
the five stocks ranked in the order of ascending price-to-tangible book value.