Suttmeier: Trading Buy Rated Community Banks

NEW YORK ( TheStreet) -- On June 10 I wrote Community Banks Remain Reluctant To Lend where I profiled 13 community banks, where nine were rated buy. In today's post I note that five of these community banks have been downgraded to hold including one this morning. I added two community banks that were upgraded to buy since June 10.

My benchmark for community banks is the America's Community Bankers Index (203.54) has been a leader of late, setting a new multi-year high at 204.48 on Monday July 1. My quarterly value level is 183.77 with semiannual and monthly pivots at 195.75 and 200.30 and weekly risky level at 205.87.

Chart Courtesy of Thomson/Reuters

Among the 11 community banks profiled today, seven are undervalued and four are overvalued. All have had tremendous gains of 28.4% to 318.5% over the last 12 months. The projections for the next 12 months call for weak gains of just 1.7% to 8.9%. Two banks have single-digit 12 month trailing price-to-earnings ratios and four have P/E above 20.0.

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