My Bank Stock Picks

Mark Heide · #1 08-21-2003, 03:58 AM

I was looking over some stocks in the financial sector and came up with the following list: CATY, CF, FBP, GDW, SUBK, and WABC. The fundamentals look good. All pay dividends and have low or fairly valued P/Es. Here's a chart of how they did compared to the S&P500 over the past three years:

http://www.quicken.com/investments/c...C+SUBK%2C+WABC

Here's a quote:

http://www.quicken.com/investments/quotes/?p=CATY,%20CF,%20FBP,%20GDW,%20SUBK,%20WABC

I still believe you will have to be selective if anything scary happens in the news, but despite all the bad news, look how well these stocks have done. Buy or sell it's your choice.

Good Luck [img]/images/graemlins/grin.gif[/img]

Mark

AceHigh · #2 08-24-2003, 08:08 PM

Check out RDN, Radian Group, if you like financial sector stocks.

Mark Heide · #3 08-25-2003, 03:26 AM

Acehigh,

RDN has done well lately and over the past three years it showed a good gain. It did not do as well as some of the ones I picked until recently, but it is worth putting on my list. Thanks for the tip.

Mark

Wildbill · #4 08-26-2003, 01:54 AM

Why bank stocks? I think its a terrible field to be in for the next few years. These guys have been loaning out money cheap and as interest rates go up their earnings are going to get crimped. Granted they probably will make a litttle more off the spread of deposit rates to loan rates, but I doubt it will offset the drag. Not to mention I think banks will just keep getting bigger. The costs of things such as processing and having online transactions is heavily skewed to the bigger entities as they get lower costs for these things, things that inevitably will be done by the biggest players. Your best hope with the smaller banks is that they get bought up. In my view you have to be careful about a supposed bargain, such as stocks with low PEs and high yields, these conditions exist for very real and credible reasons.

Mark Heide · #5 08-26-2003, 03:56 AM

Wildbill,

I picked these stocks because of their track record compared to the bigger know names. If you have any information on any of the ones I've picked that would change my mind, I'd like to hear it. I do agree with you that small regional banks end up getting bought up if they are good performers. If you know any of those, let in on the information.

Lastly, I read too much information on tech stocks and I believe that techs are not a good investment for a few reasons. First, they usually don't pay dividends. Second, they usually issue stock and not buy any back until the stock drops to rock bottom prices. Third, the volitility of techs is high due to constant changes in technology.

I would like to get some talk on other sectors that are worth investing in.

Mark

Wildbill · #6 08-26-2003, 04:07 PM

I just think if you are going to play bank stocks you have to stick to the consolidators. The little guys are in a tough spot, the only thing they can offer is personal service, which is a nice niche but not a big moneymaker. The big guys have scale which will just become more and more important as this business is completely overhauled by tech and the net.

Choosing bank stocks because you don't like tech stocks seems a bit out there Mark. My preferred sector right now is transportation, namely freight carriers and companies like FedEx. I see them being the biggest beneficiaries of the double whammy of better systems and technology that will improve their efficiency and margins, as well as the nascent improvement in the economy which is always seen with them. They have been bid up a bit on the probability of some recovery in business levels, but I don't think people realize just how much big scale companies like this can gain from just little things that improve efficiency.

BigSlick · #7 08-26-2003, 08:45 PM

Buy gold. My picks (long term 1-3 years)
BGO $2 now target 3+
HL $6 now target 10+
GFI $10 now target 20+
WHT $1.4 now target 2.50+
gold will take off in the next 2 months again

AceHigh · #8 08-26-2003, 11:02 PM

[ QUOTE ]
namely freight carriers and companies like FedEx.

[/ QUOTE ]

Are you worried about gasoline prices at all with these companies? I know the independent truckers get killed by high diesel prices.

Wildbill · #9 08-26-2003, 11:39 PM

Not really, I think its a temporary issue that will go away in a short time. Usually I laugh when people start talking about gouging, but right now it feels like it. A few unrelated and minor events in supply and suddenly the price of gas has shot up to incredible heights. And notice that oil prices, while fairly high, aren't really matching the jump in gas prices. Either hording or speculation could cause this, but I am starting to think that maybe this regional pricing mess that the gas companies use is being modified to their benefit. When supplies are short or demand is high, its understandable but there is no real market events here that dictate this sudden surge in prices. For that reason it could just as easily pass in 3-4 weeks time. Maybe they are trying to make hay on the last shot of summer demand, who knows. But the fundamentals don't support it. Whats more, the longer the prices stay here, the more that will get pumped. I sense a lot more getting pumped soon and OPEC will have trouble controlling any of it.