For Immediate Release
Be Bold! Buy These Bank Stocks Now
Bank stocks around the globe have taken a dive in the last 2 weeks as gloom and doom dominates the headlines.
But instead of cowering in fear, it's time to take action.
Not all banks are created the same. It's time to look beyond the headlines to find the hidden gems.
2011 = 2008?
Just like in 2008, there are rumors going around the globe that certain large international banks may need capital and/or be close to going under. Whether or not these rumors are true is not really relevant, because true or not, it is putting the "fear" trade back into the financial sector. And fear is what is moving the bank stocks right now.
As European banking stocks get hit especially hard, we're again hearing talk of a ban on short selling of the financial stocks. The "too big to fail" large cap banks in the United States, like Bank of America and Citigroup, have also seen their shares hit new 52-week lows in recent sessions. A lot of this sounds like 2008 all over again.
But before you dismiss the banking stocks as too much of a mess to touch, remember that there are a whole host of banks that survived the 2008 financial crisis relatively unscathed and are likely to do so again in 2011.
These banks are being lumped in with all the others. It's guilt by association. But smart investors know to dig deeper to discover those companies that are being sold off for the wrong reasons.
The bank stocks are part of the emotional sell-off but investors should really take another look.
3 Banks to Buy Right Now
All 3 of these banks have seen their share prices hit hard. That has created a buying opportunity.
In the last 3 months, shares have fallen by the double digits- with most of the decline occurring in the last 2 weeks.
1. Royal Bank of Canada down 14.3%
2. Toronto Dominion down 10.4%
3. UMB Financial down 11.6%
They Never Drastically Cut Their Dividends in 2008/2009
If you're still a little queasy about jumping in given the volatility (and with memories of Bear Stearns and Wachovia in your head), keep in mind that not only did these three banks survive 2008, they thrived.
Only Royal Bank of Canada cut its dividend during the financial crisis but it was not by a large percentage. The dividend payment has since resumed its upward trajectory and has easily surpassed the 2008-2009 levels. Neither Toronto Dominion or UMB Financial cut their dividend at all during the crisis.
That is impressive because many of their peers either cut the dividend to the bone or eliminated it altogether. Many have not even resumed paying a dividend.
Their current dividend yields are also very attractive:
1. Royal Bank of Canada: yield of 4.4%
2. Toronto Dominion: yield of 3.6%
3. UMB Financial: yield of 2.0%
Double Digit Earnings Growth Expected
While some banks are struggling, these three are not. All three have low P/Es and analysts expect double digit earnings growth in 2011.
1. Royal Bank of Canada (RY) is Canada's largest bank as measured by assets and market cap. It provides both personal and commercial banking, wealth management and investment banking services in 58 countries.
It reported record net income in the first quarter of 2011 and will report second quarter results on Aug 26.
Forward P/E: 10.5
Expected fiscal 2011 Earnings Growth: 32.5%
Zacks #3 Rank (hold)
2. Toronto-Dominion Bank (TD) is the 6th largest bank in North America. It provides Canadian and U.S. personal and commercial banking, wealth management, and wholesale banking.
Net income rose 18% year over year in the fiscal second quarter. The bank will report third quarter results on Sep 1.
Forward P/E: 10.4
Expected fiscal 2011 Earnings Growth: 22%
Zacks #2 Rank (buy)
3. UMB Financial (UMBF) is a financial services company headquartered in Kansas City. It operates in 7 states and offers banking and asset management services, such as mutual funds.
The company saw record total revenue in its second quarter due to strength in its fee business. It also saw average total deposits rise 14.9% year over year.
Forward P/E: 12.9
Expected 2011 Earnings Growth: 22%
Zacks #3 Rank (hold)
Not every bank is scary but stock investors are acting like they are as they sell the sector off en mass. Use this sell off as a buying opportunity to pick up high quality names on the cheap. And you'll even get some great dividend yields too.
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