Bank stocks: 2012 could be a very good year
Although the financial sector took a hit on economic woes Thursday, a top analyst thinks the banks could bounce back in 2012, especially if policymakers are able to ease the increasing strains on the global financial system or even solve Europe鈥檚 sovereign debt crisis altogether. 听
A 鈥済lobal financial meltdown鈥� was averted when the world鈥檚 major central banks on Wednesday announced a coordinated plan to support the global financial system, said David Hilder, an equity research analyst at Sesquehanna.
Bank stocks had been trading on concerns Europe might see a Lehman Brothers-type event, Hilder said. Lehman Brothers had been the fourth largest investment bank in the U.S. On September 15, 2008, it filed for Chapter 11 bankruptcy protection, marking the largest bankruptcy in U.S. history. Thanks to the coordinated efforts of the world鈥檚 central banks, Hilder thinks a Lehman-type scenario is now less likely to play out. In turn, he has a favorable view on most bank stocks, calling them 鈥渋ncredibly cheap.鈥�
听罢补办别 Bank of America, for example. Hilder likes the New York City-based bank because it has strong franchises in both consumer and commercial banking. He said it鈥檚 also one of the top three global investment banks and has the best retail brokerage system in the world. BAC is a cheap stock that will do better over time, he added.
听鈥淚f Europe does come to some credible addressing of its problems, you will see these stocks go a lot higher over the next 12 months,鈥� Hilder said, who spent seven years as managing director at Bear Stearns and was recognized as a top analyst by 鈥淭he Financial Times鈥� and StarMine.
听Keith McCullough, CEO of Hedgeye Risk Management, isn鈥檛 holding his breath. Valuation isn鈥檛 a catalyst here, he argued.
听Should policymakers fail to solve Europe鈥檚 sovereign debt crisis, Hilder agreed with McCullough that the world would be in a 鈥渕uch more dangerous situation.鈥� He鈥檚 not sure any stock or sector would do well in that kind of an environment.
If trader Stephen L. Weiss were pressed to trade the banks, he would go with JPMorgan Chase and Goldman Sachs. Goldman, he said, is a 鈥済reat franchise.鈥� An author and founder of Short Hills Capital, Weiss has nearly 25 years of experience on Wall Street.
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