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Welcome to Episode #301 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.
2022 has been a tough year for investors, with nearly all sectors on the decline except energy. Even the banks, which are supposed to see benefits from the Federal Reserve’s campaign to raise interest rates, have fallen this year.
The big banks have taken on the chin but even the smaller, community banks are down on the year.
Could this be a buying opportunity in the banks?
How to Screen for Cheap Banks
While you can look at Price-to-Earnings (P/E) ratios for any type of company, the P/E isn’t as good of an indicator of cheapness for the banks as the Price-to-Book (P/B) ratio is.
Bank analysts have often said that investors should buy banks with a P/B ratio of 1.0 and sell when it gets to 2.0.
In 2022, there are plenty that are under 2.0.
Tracey screened for a P/B under 1.5, to get it cheap, screened for industry such as Banks-Major Regionals, on the Zacks.com screening tool, and threw in a dividend over 2%, because, why not?
There were 13 stocks in that one screen.
But then she also screened for banks in the various regions: West, Southwest, Southeast, Midwest, Northeast.
This resulted in another 176 publicly traded cheap banks with dividends over 2%.
Citigroup is one of the large banks which has both U.S. and international business. Investors should be sure to understand the business model of each bank they are interested in. They all don’t have the same business segments.
Shares of Citigroup have fallen 32% year-to-date. It has one of the lowest P/B ratios in this screen, at just 0.4.
Citigroup is also paying a juicy dividend, with a 5% yield.
Citigroup is reporting earnings this week. Should investors have it on their short list?
Wells Fargo has been in the doghouse with investors the last few years. Even Warren Buffett’s Berkshire Hathaway has sold out of his long-time position in the stock.
Shares of Wells Fargo are down 15% year-to-date. It’s cheap with a P/B ratio of 0.96.
Wells Fargo also pays a dividend, but it’s yielding a bit less than some of the others at just 3%.
Cadence Bank calls itself a “premiere” regional banking franchise across the South and Texas. It has a market cap of $4.7 billion and operates 400 branches.
Shares of Cadence Bank have fallen 11.7% year-to-date. It’s cheaper than ever, with a P/B ratio of just 0.66.
It also has a juicy dividend, currently yielding 3.4%.
Should a smaller regional bank like Cadence Bank be on your short list?
What Else Should You Know About the Banks in 2022?
Tune into this week’s podcast to find out.
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5 Cheap Bank Stocks in 2022
Welcome to Episode #301 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.
2022 has been a tough year for investors, with nearly all sectors on the decline except energy. Even the banks, which are supposed to see benefits from the Federal Reserve’s campaign to raise interest rates, have fallen this year.
The big banks have taken on the chin but even the smaller, community banks are down on the year.
Could this be a buying opportunity in the banks?
How to Screen for Cheap Banks
While you can look at Price-to-Earnings (P/E) ratios for any type of company, the P/E isn’t as good of an indicator of cheapness for the banks as the Price-to-Book (P/B) ratio is.
Bank analysts have often said that investors should buy banks with a P/B ratio of 1.0 and sell when it gets to 2.0.
In 2022, there are plenty that are under 2.0.
Tracey screened for a P/B under 1.5, to get it cheap, screened for industry such as Banks-Major Regionals, on the Zacks.com screening tool, and threw in a dividend over 2%, because, why not?
There were 13 stocks in that one screen.
But then she also screened for banks in the various regions: West, Southwest, Southeast, Midwest, Northeast.
This resulted in another 176 publicly traded cheap banks with dividends over 2%.
5 Cheap Banks Stocks in 2022
1. Citigroup (C - Free Report)
Citigroup is one of the large banks which has both U.S. and international business. Investors should be sure to understand the business model of each bank they are interested in. They all don’t have the same business segments.
Shares of Citigroup have fallen 32% year-to-date. It has one of the lowest P/B ratios in this screen, at just 0.4.
Citigroup is also paying a juicy dividend, with a 5% yield.
Citigroup is reporting earnings this week. Should investors have it on their short list?
2. The Bank of New York Mellon (BK - Free Report)
The Bank of New York Mellon is a global investment company with operations in 35 countries.
Shares of the Bank of New York Mellon have fallen 35% year-to-date. It now has a P/B ratio of just 0.86.
In the second quarter of 2022, the Bank of New York Mellon raised its quarterly dividend 9%. It is currently yielding a juicy 3.9%.
Should the Bank of New York Mellon be on your short list?
3. Wells Fargo (WFC - Free Report)
Wells Fargo has been in the doghouse with investors the last few years. Even Warren Buffett’s Berkshire Hathaway has sold out of his long-time position in the stock.
Shares of Wells Fargo are down 15% year-to-date. It’s cheap with a P/B ratio of 0.96.
Wells Fargo also pays a dividend, but it’s yielding a bit less than some of the others at just 3%.
Should Wells Fargo be on your short list again?
4. AmeriServ Financial (ASRV - Free Report)
AmeriServ Financial is the opposite of Citigroup. It’s a small cap community bank based in Johnstown, PA with a market cap of just $63 million.
Shares of AmeriServ Financial are down on the year, but only 4.1%. Yet, it’s still cheap, with a P/B ratio of 0.6.
And yes, it also pays a dividend, currently yielding 3.2%.
Should investors keep smaller banks like AmeriServ Financial on their short list?
5. Cadence Bank (CADE - Free Report)
Cadence Bank calls itself a “premiere” regional banking franchise across the South and Texas. It has a market cap of $4.7 billion and operates 400 branches.
Shares of Cadence Bank have fallen 11.7% year-to-date. It’s cheaper than ever, with a P/B ratio of just 0.66.
It also has a juicy dividend, currently yielding 3.4%.
Should a smaller regional bank like Cadence Bank be on your short list?
What Else Should You Know About the Banks in 2022?
Tune into this week’s podcast to find out.