The cheapest stocks by valuation are: Commerce Bancshares (CBSH) overvalued by 18.7%, First Niagara (FNFG) overvalued by just 4.5%, M&T Bank (MTB) overvalued by 17.3% and Peoples United (PBCT) overvalued by 6.9%.
As shown in the table, all 24 stocks have "3-Engine" or hold ratings according to ValuEngine. A hold rating stock can trade up 5% without getting upgraded to being a "4-Engine" or buy-rated stock, or can trade down 5% without getting downgraded to a '2-Engine' or sell-rated stock. First Niagara is projected to gain 4.9% in 2014 so this bank stock is closest to an upgrade potential.
The column that is headed P/E Ratios represents the trailing 12-month price-to-earnings ratios. JPMorgan has the lowest P/E ratio at 9.9. Northern Trust (NTRS) has the highest P/E ratio at 20.7.
The 200-day SMAs will be on the rise as the year progresses and my prediction is that bank stocks will test their 200-day SMAs at some point in 2014, as a reversion to the mean.
How to use Value Levels -- If you are looking to buy bank stocks or add to long positions, my buy-and-trade methodology recommends that you employ good-until-cancelled GTC limit orders to buy weakness to a value level shown in the table. The value levels followed by a 'Q' will apply until the end of March. Those followed by an 'S' will apply until the end of June. Those followed by an 'A' will apply for all of 2014.
How to use Pivots -- A pivot will likely be a magnet during the time frame shown by the letter; Q for the first quarter, S for the first half and A for the entire year. If a value level or risky level is violated during its time horizon that level becomes a pivot and has an 85% chance of being re-tested during its time horizon.
How to use Risky Level -- If you are looking to book profits on bank stocks, my buy-and-trade methodology recommends that you employ GTC limit orders to sell strength to a risky level shown in the table.
For most of the stocks I show two risky levels in the table. The risky levels followed by an M'will apply only for the month of January; Those with a Q will apply until the end of March. Those followed by an S will apply until the end of June. Those followed by an A will apply for all of 2014.
At the time of publication the author held no positions in any of the stocks mentioned.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.