8. SunTrust


Shares of SunTrust ( STI) of Atlanta closed at $28.97 Monday, trading for 1.1 times tangible book value, and for 10.7 times the consensus 2013 EPS estimate of $2.71. The consensus 2014 EPS estimate is $3.00.

The shares returned 62% during 2012, following a 40% decline during 2011.

SunTrust will announce its fourth-quarter results on Jan. 18, with analysts expecting a profit of 62 cents a share, declining from $1.98 in the third quarter, but increasing from 13 cents in the fourth quarter of 2011. Both prior periods reflected one-time items.

During the third quarter, the company strengthened its balance sheet by selling its holdings of Coca-Cola ( KO) shares, for a pre-tax gain of $1.9 billion. SunTrust also reported a $371 million provision for mortgage repurchase claims during the third quarter, saying that the move had boosted its putback reserves "to a level that is expected to cover the estimated losses on loans sold to Government Sponsored Enterprises (GSEs) prior to 2009." The fourth-quarter 2011 results reflected an elevated mortgage putback provision, as well as a negative mortgage servicing rights valuation adjustment, in light of the expected effect of the expanded Home Mortgage Refinance Program, or HARP 2.0.

JPMorgan analyst Vivek Juneja rates SunTrust "Overweight," with a price target of $32.50, estimating that the company will report fourth-quarter earnings of 65 cents a share, with a 2013 EPS estimate of $2.78, increasing to $3.10 in 2014.

Juneja said that among large-cap bans covered by his firm, "SunTrust should be one of the biggest beneficiaries from housing market recovery," as the company "has had an unusually large drag from mortgage related issues on several fronts versus peers." The analyst added that the stock's "valuation is also attractive as STI trades below regional peers based on tangible book multiple."

STI Chart STI data by YCharts

Interested in more on SunTrust? See TheStreet Ratings' report card for this stock.

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