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Buy the Snow, Sell the Sun

John Blank

In this Zacks Industry Rank piece, I want to look into another demographically attractive banking region: the Southeast USA. Recently, I highlighted small banks serving the demographically attractive Western Region of the USA. My top-down investing interest is piqued by obvious metrics. The Zacks Industry Rank for Banks-Southeast is currently #50 out of 265 industries we rank (top 19%). The Finance sector is #2 out of 15 (top 13%). 

Let’s start off. Look at how Zacks currently ranks USA banking regions—

 Notice anything in the above table?

 Demographically attractive Sunbelt region shares have been bid up the most. Current higher ranked regional banking areas --the Northeast and Midwest-- are the Snowy lands. These areas one-year bank returns lagged behind, a bit, in the huge share price run-up on USA regional bank shares.Zacks VGM scores of F --based on terrible Zacks Value metrics-- is the norm, in bank stock after bank stock.

After this Southeast bank industry share price run (+70%), what can be done profitably? 

I list three different small cap Southeast banks. To give a flavor for how to invest, I wanted one stock from each major style classThe first one is classed as a Growth stock. The second one is a Value stock. The third is a Momentum stock.

(1) Growth stock: National Commerce Corporation (ticker NCOM)is an Alabama bank holding company.

 What’s the attraction? Annual earnings per share (EPS) looks to go from $1.81 a share this year to 42.25 a share next year. That’s a projected EPS growth rate of +12.4%.

(2)Value stock: Fidelity Southern Corporation (ticker LION)is a bank serving Atlanta and Jacksonville.

What’s the attraction? The forward P/E is 15.27. That’s a reasonably priced stock.

(3)Momentum stock: Eastern Virginia Bankshares (ticker EVBS)is a Virginia bank holding company.

What’s the attraction (and danger)? This stock price technical chart shows some stiff momentum. The Zacks Momentum score is B. You have to be careful here.

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Fidelity Southern Corporation (LION): Free Stock Analysis Report
Eastern Virginia Bankshares, Inc. (EVBS): Free Stock Analysis Report
National Commerce Corporation (NCOM): Free Stock Analysis Report
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