- Shares of Citigroup closed at $41.83 Monday, returning 21% year-to-date, following a 44% decline during 2011. The shares trade for 0.8 times their reported June 30 tangible book value of $51.81, and for nine times the consensus 2013 EPS estimate of $4.53, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $4.09. Citigroup's great unwind continues, with CEO Vikram Pandit saying on Tuesday that since forming its runoff subsidiary City Holdings, "we have reduced its assets by over $600 billion," including the announced deal to sell Citi's remaining stake in the Morgan Stanley Smith Barney joint venture to Morgan Stanley (MS).
- Morgan Stanley is valued even more cheaply than Citi, with shares closing at $16.61 Monday, or 0.6 times their reported June 30 tangible book value of $27.70, and 8.5 times the consensus 2013 EPS estimate of $1.95. The consensus 2012 EPS estimate is 89 cents. Morgan Stanley's shares have returned 15% year-to-date, after dropping 44% during 2011.
- Bank of America (BAC) closed at $8.58 Monday, returning 55% year-to-date, following last year's epic drop of 58%. The shares trade for 0.7 times their reported June 30 tangible book value of $13.22, and for nine times the consensus 2013 EPS estimate of 91 cents. The consensus 2012 EPS estimate is 55 cents. While the shares remain attractively valued even after the year-to-date run-up, BAC is still saddled with mortgage putback risk, with loan repurchase demands rising by 41% just in the second quarter, to $22.7 billion, as of June 30.
NEW YORK ( TheStreet) -- Even in the face of regulatory headwinds, a sputtering economic recovery and narrow rate spreads, there are a variety of winning approaches for banks to grow their earnings. "Bank stocks have climbed a wall of worry this year," according to Sterne Agee analyst Peyton Green, and there's no question that the troubled sector has been a winner, with the KBW Bank Index ( I:BKX) returning 24% through Monday's close at 48.89. So where do investors turn now? One approach is to keep focusing on some of the best-known industry names, which continue to trade at huge discounts to book value: