Dividend Expert's Regional Bank Buys
11/18/2016 8:00 am EST
When I look at where market leadership might come from in coming months, I keep coming back to financial stocks, notes Chuck Carlson, editor of DRIP Investor.
Indeed, while the sector has been uneven for much of the year, there are reasons to be bullish on banks and financial-services stocks:
The profit picture is improving and as long as the overall economy doesn’t slide and the financial markets don’t tank — and I don’t think either of those things is going to happen — the profit picture should continue to brighten for financials.
Rising interest rates would be a plus for the group, helping net interest margins for banks. Meanwhile, valuations still attractive.
On a relative basis, valuations for many financial stocks look attractive versus other sectors. Regional banks in particular look attractive.
Among regional banks, I like Regions Financial (RF). To be sure, it has a history of big price swings and the stock still represents an aggressive play in the banking sector.
But I am drawn to the stock’s impressive chart action, and the yield of 2.6% provides a kicker to total-return potential.
Based in Georgia, Ameris Bancorp (ABCB) is coming off a solid third quarter in which per-share profits jumped 27% and beat the consensus estimate. Ameris should continue to show solid relative strength.
Zions Bancorporation (ZION) provides banking services in the western U.S. Earnings estimates have been rising over the last 90 days. The stock has behaved well and should outperform the banking group.
By Chuck Carlson, Editor of DRIP Investor