This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

3 Growing Bank Stocks for Black Friday

Stocks in this article: BACRFFRCSIVBSBNY

NEW YORK ( TheStreet) -- It's time for bank stock investors to look beyond the "cheap" and add some higher quality names to their portfolios.

Some of the best bank stock money makers this year have been the names that were so lousy last year, and they still haven't made up what they lost.

Bank of America (BAC) is a great example, and, of course, a favorite punching bag. The company's shares were up 76% year-to-date as of Wednesday's close at $9.77, which is, of course, quite impressive. However, this year's stellar performance follows a 58% decline during 2011. The shares are actually down 26% since the end of 2010, and are down 74% over the past five years.

Bank of America's shares trade for just Bank of America's shares trade for a low 0.7 times their reported Sept. 30 tangible book value of $13.48, and for 10 times the consensus 2013 earnings estimate of 97 cents a share, among analysts polled by Thomson Reuters. The consensus 2014 EPS estimate is $1.27. Stifel Nicolaus analyst Christopher Mutascio on Monday upgraded the shares to a "Buy" rating, saying that because of cost cuts, Bank of America will see much greater earnings growth in 2014 than the other money center banks.

Another high flyer among stocks of the largest U.S. banks is Regions Financial (RF) of Birmingham, Ala., with shares returning 54% year-to-date through Wednesday's close at $6.58. This year's recovery -- during a year of transition with Regions selling its Morgan Keegan subsidiary in the first quarter followed by a common equity raise and exit from the Troubled Assets Relief Program (TARP) in the second quarter -- follows a 38% decline for the stock in 2011. Shares of Regions are down 5% since the end of 2010, with a negative five-year total return of 68%.

Shares Regions trade for 0.9 times their reported Sept. 30 tangible book value of $7.02, and for nine times the consensus 2013 EPS estimate of 77 cents. The consensus 2014 EPS estimate is 82 cents. Following the next round of Federal Reserve stress tests during the first quarter, long-suffering investors will be looking for a return of capital from the company. Credit Suisse analyst Craig Siegenthaler on Nov. 14 estimated that Regions will be approved by the Fed to raise its quarterly dividend to four cents from once cent, and to buy back $249 million worth of shares during 2013."

Bank of America and Regions have been winding down certain areas of their business over the past few years, as they have navigated the credit crisis, and now face the industry-wide challenges of narrowing net interest margins and weak loan demand. Both trade at relatively low multiples, and may well see another year of outstanding returns next year.

But bottom-fishing isn't for every investor. The three growing regional names that we profile below have seen positive total returns year-to-date, and for five years, through Wednesday's close. All have been steady earners and all are well-positioned for the difficult rate environment, with strong loan growth and two have strong or growing fee revenue.

These names also trade at significantly higher valuations than Bank of America and Regions, however, you must pay a premium to own a growing business that is also growing earnings, and these names appear to have significantly lower downside than many of the big names, if the U.S. economy slips back into recession.

Here are the three growing bank stocks for Black Friday, in order of ascending total assets:

1 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!
DOW 17,843.23 +25.33 0.14%
S&P 500 2,070.31 +0.90 0.04%
NASDAQ 4,761.5260 +6.6340 0.14%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs