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Banks (Finance)

Financial Sector Stocks Show Promise Amid Industry Strength

Strategic Insights

— 1 min read

Despite the poor performance of the financial sector in the Standard & Poor's 500 index this year, with a decline of more than 20%, stocks of major banks, regional banks, and trust banks, as well as life insurers, look attractive, trading at or below tangible book value. The sector's weakness has led to undervalued stocks, making them appealing to investors. With many financial institutions reporting their earnings, including Citi and Wells Fargo, the sector is expected to be active today.

Key Takeaways:

  • Financial stocks have declined by more than 20% in the Standard & Poor's 500 index so far this year, while the S&P 500 is off just 3%.
  • Major banks, regional banks, and trust banks, as well as life insurers, are trading at or below tangible book value, a conservative measure of shareholder equity.
  • Stocks such as Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley have seen losses of 40% or more.
  • Citi and Wells Fargo are reporting their earnings today, and Goldman Sachs will report its earnings tomorrow.
  • JP Morgan fell after issuing its results last week.

Statistics:

  • The financial sector's decline in the Standard & Poor's 500 index is more than 20%.
  • The S&P 500's decline is just 3%.
  • Bank of America (BAC) has seen losses of 40% or more, with a low of $6.14 on September 22, 2011.
  • Citigroup (C) has seen a downtrend since September 6, 2011, with a low of $27.26.
  • Goldman Sachs (GS) has also seen a downtrend since September 6, 2011, with a low of $104.52.

Sources:

  • "Bank Stocks: A Better Time to Bank on?" by Barron's (no date listed)
  • MidnightTrader via COMTEX (October 17, 2011)
  • Comtex SmarTrend Alert (October 13, 2011)

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