Three banks on deep discount
By MarketWatch
Last update: 2:29 p.m. EDT Oct. 9, 2008
Comments: 35
BOSTON (MarketWatch) -- Erin Davis, who follows the banking industry for Morningstar Inc., says that "none of the economies can continue to operate without banks, and if you think all banks are going out of business, you might not want to be in stocks at all."
With that in mind, Davis suggested that investors can pick and choose between banking issues to find those where the business is positioned for long-term survival, despite the industry's short-term troubles. She suggested that investors looking at bank stocks seek out an even bigger discount than what ordinarily qualifies as "good value."
In an interview with Chuck Jaffe, MarketWatch senior columnist, Davis said that investors should look for "even-deeper discounts to [a bank's] value as an ongoing entity," saying that for investments that are considered high risk she'd be looking for a 55% discount to Morningstar's fair-value estimate. By comparison, she said, "for a good company in a more normal time, we'd only look for a discount of 25% to 35%."
Davis put buy recommendations on Bank of Nova Scotia Halifax (BNS:
Bank of Nova Scotia (The)
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Last: 34.49-1.46-4.06%
12:48pm 10/10/2008
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BNS 34.49, -1.46, -4.1%) , HSBC Holdings (HBC:
HSBC Hldgs Plc
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Last: 68.42-2.09-2.97%
12:54pm 10/10/2008
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HBC 68.42, -2.09, -3.0%) and Banco Santander (STD:
banco santander sa adr
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Last: 11.98-1.07-8.20%
12:52pm 10/10/2008
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STD 11.98, -1.07, -8.2%) .
She put a hold on Royal Bank of Canada (RY:
Royal Bank of Canada
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Last: 35.49-0.50-1.39%
12:53pm 10/10/2008
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RY 35.49, -0.50, -1.4%) , ICICI Bank (IBN:
icici bk ltd adr
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Last: 12.29-5.06-29.16%
12:56pm 10/10/2008
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IBN 12.29, -5.06, -29.2%) , Bank of America (BAC:
bank of america corporation com
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Last: 20.45+0.82+4.18%
12:56pm 10/10/2008
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BAC 20.45, +0.82, +4.2%) and BlackRock Kelso Capital (BKCC:
blackrock kelso capital corp com
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Last: 5.89-1.11-15.86%
12:42pm 10/10/2008
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BKCC 5.89, -1.11, -15.9%) , and suggested selling HDFC Bank (HDB:
hdfc bank ltd adr reps 3 shs
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Last: 61.17-5.18-7.81%
12:54pm 10/10/2008
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HDB 61.17, -5.18, -7.8%) and Mitsubishi UFJ Financial Group (MTU:
mitsubishi ufj finl group in sponsored adr
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Last: 6.26-0.76-10.83%
12:54pm 10/10/2008
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MTU 6.26, -0.76, -10.8%) , noting for the latter that "what's remarkable about Mitsubishi UFJ is that for a bank so big, it is so mediocre."
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Chuck Jaffe's podcasts features expert reviews of stocks and mutual funds suggested by MarketWatch readers; to request a stock or mutual fund for review by an expert in a future podcast, send your name, hometown and the ticker symbols that interest you to cjaffe@marketwatch.com. End of Story
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Comments: 35
I bid 1 penny each. Do I hear higher bids.
- SuperMario
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