This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Downgrading Two of Four 'Too Big to Fail' Banks

Stocks in this article: BAC C JPM WFC

NEW YORK ( TheStreet) -- On March 7, the Federal Reserve announced its results of mandated stress tests for the 18 largest bank holding companies. Periodic stress tests are a requirement of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Federal Reserve's implementing regulations. I am not going to summarize the results of these stress tests except to say that the four "too big to fail" money center banks passed their tests.

Today I am providing additional stress measures for these major money center banks based upon data from , weekly charts, and my proprietary models and from stock specific data available from the FDIC Quarterly Banking Profile for the Fourth Quarter of 2012.

The last time I profiled the four "too big to fail" was on Feb. 6, in The 'Too Big to Fail' Banks Remain Buy Rated Post-Earnings . The biggest change since then is that two of the four have been downgraded to hold from buy according to ValuEngine, which implies that additional stresses are evident based upon our measures.

Overall we begin the week under a ValuEngine Valuation Warning with 65.5% of all stocks overvalued and with the finance sector 18.6% overvalued.

Bank of America (BAC) ($12.07 vs. $11.88 on Feb. 6) remains buy rated with the stock 6.9% undervalued with a one-year price target at $12.81. BAC opened Friday at a new multi-year high at $12.44, a level not seen since May 2011. The stock has gained 49.8% over the last twelve months with a reasonable twelve month forward P/E ratio at 11.42.

BAC has a neutral weekly chart profile with declining momentum with the stock above its five-week modified moving average (MMA) at $11.56 and the 200-day simple moving average (SMA) at $11.73. My semiannual value level lags at $9.01 with a monthly pivot at $11.54 and annual risky level at $17.07.

FDIC data shows that BAC increased its total assets by 16.6% to $1.69 trillion in Q4 sequentially. The bank has an asset to risk based capital ratio of 9.99% up from 9.69% in Q3, which is a sign of increased stress as risk based capital is supporting assets increasing at a faster pace making this "too big to fail" bank even bigger.

1 of 3

Select the service that is right for you!

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 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • 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