The financial/banking sector is genuinely more unpredictable than others, and foretelling bank stocks’ performance can be daunting.
Banks can benefit by profiting when rates increase— particularly exciting when you consider the Fed’s recent 25 basis-point (or 0.25%) rate hike. There’s a downside, though, in that increased lending costs can lead to a reduction in consumer demand.
The title might suggest that the list is a mixed bag, and it is. It’s unclear whether we should buy, hold, or sell/avoid any of these. I chose three bank stocks that are substantially down YTD, at the lowest of their 52-week price ranges.
It seems wise to buy banks at their lowest price and profit from a large upside on the rebound. It makes sense and actually seems doable. On the other hand, maybe it’s simply just too risky— for now, at least…
Buy? Hold? Avoid? I’m taking a new approach— leaving this one up to you, friends. They pay decent dividends, if nothing else. Each have consensus hold ratings, and we all know that neutrality helps us keep an open mind:
First Interstate BancSystem (FIBK)
FIBK’s market cap is $3.1 billion, with a 10-day avg vol of $1.37M. Down 24.76% YTD, it recently officially hit a new 52-week low. FIBK has a P/E of 15.69x and a forward P/E of 8.37x. FIBK has a dividend yield of 6.47%, with a quarterly payout of 47 cents ($1.88/yr) per share and an 86.73% payout ratio. FIBK’s median price is $39, and with it comes a high of $46 and a low of $33. Upside Potential: 34.11 – 58%.
Associated Banc-Corp (ASB)
Currently down 23.56% YTD, ASB has a market cap of $2.7 billion and a 10-day avg vol of 4.16 million shares. ASB has a P/E of 7.6x and a forward P/E of 6.9x. Its PEG is –4.76x. ASB has a dividend yield of 4.76%, with a quarterly payout of 21 cents ($0.84/yr) per share. ASB’s median price target is $25, with a high of $28, low of $21. Upside Potential: 41.6 – 58.6%.
First Republic Bank (FRC)
FRC has a market cap of $2.9 billion and a 10-day avg vol of 131.1 million shares. FRC shows a P/E of 1.5x, a forward P/E of 3.4x, and a PEG of 0.03x. FRC holds the distinction of 14 consecutive earnings reports that exceeded analysts’ projections. FRC has a dividend yield of 8.62%, with a quarterly payout of 27 cents ($1.08/yr) per share. FRC has a frankly funny price range; it’s so drastic; it has a median price target of $135, with a high of $162 and a low of $5 — Upside Potential: 977.84 – 1193.40%.
