In the wake of foreclosure scandal at some major financial
firms, it's no surprise that I'm recommending a number of banks
be sold this week. Despite improving earnings and a general
spring in the market's step since September, my fundamental and
quantitative screens show that major financial stocks like
Bank of America
) and others are still bad investments.
As a "growth guy," I'm not much of a believer in financial
stocks to begin with - at least, not the large commercial banks.
It's very difficult for these companies to show continuous
improvement in revenue and earnings - that is, legitimate revenue
and earnings that won't be eaten up by a bunch of mortgage
write-downs a few years later!
The bottom line is that the bottom lines of these banks are
still battered and there's not much sign for optimism looking
forward. Investors should get out of the following 7 financial
Wells Fargo & Co. (
Diversified financial services company
Wells Fargo & Co.
) has had a rough run since May, falling -20.9% over the past
five months. Over the past 12 months, the stock is down
-10.6%, compared to gains of +12.7% and +10.5% for the Dow Jones
and S&P 500, respectively. Currently trading at $26.01,
WFC is just $3 above its 52-week low. A quarterly earnings
growth of -3.5% year-over-year is also a cause for concern.
Bank of America Corp. (
Bank of America Corp.
) has also had a forgettable 2010. Year-to-date, the bank
stock has dropped -24.3%. Since mid-April, BAC has spiraled
-41.2%. Analysts are expecting earnings to dip this
quarter, and have projected EPS of 24 cents for BAC after it
reported earnings of 27 cents last quarter. In its last
income statement, Bank of America also reported a quarterly
earnings change of -3.1% year-over-year. BAC stock is
barely above its 52-week low of $11.17, with a stock price of
Goldman Sachs Group (
Bank holding and global investment banking company
) has slipped -12.3% year-to-date, compared to moderate gains by
the broader markets. Since mid-April, the stock is down
-14.5% as well. A dismal quarterly earnings growth of
-82.2% year-over-year highlighted Goldman's last income
statement. With a stock price of $158.01, GS is an
expensive stock that should be sold sooner rather than later.
Credit Suisse Group ADS (
Credit Suisse Group
) is a financial services company that provides advisory
services, solutions and products to its clients. Since last
October, CS stock is down -24.8%. This quarter, analysts
have projected earnings of $1.01, which is down from an actual
EPS of $1.04 last quarter. Trading at $41.98, Cs is far
removed from its 52-week high of $58.73 from last November.
Deutsche Bank AG (
) is another global investment bank that cracks the list.
Over the past 12 months, DB is down -26.2%, and has slid -28.3%
since mid-April. In its last income statement Deutsche Bank
reported a quarterly revenue growth of -3.3%
year-over-year. The fact that DB is trading at $58.52 -
just $5 removed from its 52-week low of $53.08 - has not left
Charles Schwab Corp. (SCHW)
Financial holding company
Charles Schwab Corp.
) has left stockholders displeased in 2010. Since May, SCHW
is down -22.2%, compared to gains by the broader markets.
In its last income statement, Charles Schwab reported a quarterly
earnings growth of -38% year-over-year. The fact that SCHW
pays a dividend may intrigue some potential investors, but at
just 6 cents, the dividend is not a reason to purchase this
BB&T Corp. (BBT)
) rounds out the list of financial stocks to sell. Since
mid-May, BBT has fallen -35.2%, or $12.25. Analysts aren't
expecting much from BBT this quarter, dropping earnings estimates
by a cent after the company reported EPS of 30 cents the past two
quarters. Its stock price of $22.54 sits just above its
52-week high of $21.72. If you haven't already, sell this
financial stock before any more damage is done to your
As of this writing, Louis Navellier did not own a position
in any of the stocks named here.