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Bank Stocks: Can't Get No Respect
Will Bank Stocks Ever Recover?
Although bank stocks have recovered somewhat from the drubbing they received last autumn, they still seem like the Rodney Dangerfield of the stock market. Every time a bank reports improving results these days, investors treat it with skepticism and disdain. Because of this, we thought it was worth revisiting the banks even though we have written about them several times over the past year or so.
Despite a number of headwinds – such as increased regulation – many of the banks look quite cheap to us. Many are currently trading well below their book value per share. Before 2008, many healthy banks traded at more than twice book value. Today, earnings are improving, and the risks have been reduced. Most U.S. banks have reduced their overall leverage significantly since 2008. In addition, the recent government “stress tests” should provide at least some measure of comfort.
In the subscriber-only version of this article we discuss 10 bank stocks that look quite attractive.