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Bank Stocks 'Have Further Room to Climb' in 2014

Stock Picks

RBC continues to have "outperform" ratings on 23 large cap and mid-cap bank stocks, which the analyst team categorized by "theme."

Among the firm's picks for "credit recovery/turnaround," are Bank of America, Citigroup and Regions Financial RF of Birmingham, Ala.

For "return of capital" through increased dividends and share buybacks following the Fed's annual stress tests in March, RBC has "outperform" ratings on Citigroup, Fifth Third Bancorp (FITB) of Cincinnati, JPMorgan, KeyCorp (KEY) of Cleveland, State Street (STT) of Boston and Wells Fargo (WFC).

RBC's list of banks in the "revenue generators" category rated "outperform" include the firm's "top pick" among bank stocks, which is PNC Financial Services Group (PNC - Get Report) of Pittsburgh.

PNC's shares closed at $75.48, returning 33% year-to-date.  The shares trade for 1.5 times tangible book value and for 10.1 times the 2015 EPS estimate of $7.45.  Cassidy's price target for the shares is $85, implying 13% upside over the next 12 months.

The following chart shows PNC's performance against the KBW Bank Index and the S&P 500:

PNC Chart
PNC data by YCharts

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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