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Should You Buy Community Bank Stocks in 2021?

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  • (0:45) - Finding The Right Bank Stocks For Your Portfolio
  • (6:10) - Gaining Exposure Through ETFs
  • (14:25) - Tracey’s Top Stock Picks
  • (26:15) - The Big Takeaways From The Banking Industry: QABA, FRC, CMA, WSBC, WASH, UCBI
  •                Podcast@Zacks.com

 

Welcome to Episode #229 of the Value Investor Podcast

Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.

With the 10-year treasury on the move higher, trading above 1.5% in early 2021, bank earnings are also on the move higher.

Dozens of smaller regional and community banks are now Zacks Rank #1 (Strong Buys).

Bank stocks, which had been ignored by Wall Street the last few years, and which have lagged the overall market terribly, are suddenly in the spotlight.

Many bank stocks have rallied over 20% to start 2021 but they remain cheap.

Is now the time to buy?

How Do You Screen for Great Community Banks?

Investing in bank stocks can be intimidating.

The problem is, there are thousands of community banks in America, with hundreds of them publicly traded.

Even trying to narrow it down using the Zacks Rank isn’t really going to narrow it down much with the earnings on the rise for the whole industry.

What’s an investor to do?

Tracey Shares Her Favorite Bank Stocks

Tracey has had the same dilemma over the years.

That’s why she is sharing her favorite bank stocks that she has uncovered over the years running her Zacks portfolios: the Insider Trader and the Value Investor.

There are dozens of other great banks investors could be looking at.

This is a list to get investors started.

5 Bank Stocks for Your Short List

1.       First Republic Bank (FRC - Free Report) is headquartered in San Francisco and has a market cap of $29.4 billion. It’s a large regional bank but it’s still little-known outside of California. It’s a private wealth bank and is considered to be a “growth” bank so you’re not buying it for the dividend, which is only yielding 0.5%. Shares are trading near 5-year highs to start 2021, can it continue to rally?

2.       Comerica (CMA - Free Report) is a regional bank headquartered in Texas. But it also does business in Michigan, Florida and Arizona. With a market cap of $9.8 billion, it pays a hefty dividend, currently yielding 3.8%. It’s cheap with a forward P/E of just 13.

3.       WesBanco, Inc. (WSBC - Free Report) was founded in 1870 and is headquartered in West Virginia. It operates in 6 states in the Ohio Valley. Shares are up 23.6% year-to-date. This $2.5 billion market cap bank has a price-to-book ratio of just 0.9.

4.       Washington Trust Bancorp (WASH - Free Report) was founded in 1800 and its website says it’s the oldest community bank in the nation. With a market cap of $931 million, it pays a dividend yielding 3.8%. This Northeast based bank never halted its dividend during the financial crisis. Impressive.

5.       United Community Banks, Inc. (UCBI - Free Report) is one of the largest banks in the Southeast, one of the hottest parts of the country economically, with 160 offices in Florida, Georgia, North Carolina, South Carolina and Tennessee. This bank has a market cap of $3.13 billion. It’s cheap, with a forward P/E of 15.3.

What else should you know about buying bank stocks this year?

Tune into this week’s podcast to find out.

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