3 bank stocks to double your money

Financial institutions have repaired balance sheets. The next step for them is to accelerate lending.

Stock buyers have seemingly gone on strike. I suppose that makes sense, given the incessant rambling about the bull market -- that it's a bubble about to pop.

There's just enough credence in the bear case, too. The horrible winter did indeed damage the economy, plus deepening worries about geopolitical issues in Ukraine and growth in China.

It is also the dead zone for economic data and earnings season. The vacuum makes it is far too easy to push this market lower.

That's fine by me.

How can anyone can worry about this bull market ending when stocks are only up fractionally so far in 2014 and when economic growth is more likely to be greater than 3 percent? It is beyond me.

Noted banking analyst Dick Bove expects economic growth will push banking stocks significantly higher from here.

How about 100 percent higher?

We are now entering the phase of the recovery from 2008 at which banks have repaired balance sheets. The next step for banks is to accelerate lending.

If indeed the economy can deliver 3 percent or more growth this year and next, bank stocks can double in value.

So, while the headlines fret over a market crash and buyers go out on strike, I would use the opportunity to buy shares in key banking institutions.

Specifically, the regional banks look highly attractive. Here are three promising contenders that really stand out:

Regions Financial (RF -1.86%)

Operating in 16 states across the South, Midwest and Texas, Regions Financial is poised for growth. It is one of the largest full-service providers of consumer and commercial banking, wealth management, mortgage and insurance products; it operates 1,600 bank locations.  

Despite the skeptics about the economy, growth is ahead. To the extent we have 3 percent economic growth, such activity at the ground level will be funded by companies like Regions Financial, headquartered in Birmingham, Ala.

In late 2011, Regions Financial stock bottomed, but has appreciated nicely since. Still, the stock is cheap, trading for less than 1 times book value. With a book value of 11 and a 2 times book value valuation, Regions is worth more than $20 per share. With the stronger economy, earnings will push Regions Financial book value even higher, thus more gains are possible.

Zions Bancorporation (ZION -5.30%)

Operating in the faster-growing areas in the West, Zions will benefit greatly from a stronger-than-expect​edeconomy. Although shares of Zions have doubled in value since late 2011, the stock trades for just over 1 times book value. Again, to the extent economic growth hits 3 percent or more, a market valuation of closer to 2 times book value is more than appropriate.

Analysts at the moment expect Zions to grow profits by 15 percent in 2014, thus book value will be increasing as well. With bank stocks trading for book value, one can safely assume that we are far from bubble conditions. Leading the continuing bull rally will be bank stocks like Zions.

  

TCF Financial (TCB +1.31%)

TCF Financial operates in the Midwest -- where the economy is doing better than the rest of the U.S. Housing in particular is strong, with prices rebounding from the 2008 crash. TCF's recovery has been a bit more raggedy than other banks. Fees on debit cards and other services became a big issue for the company and hampered recovery in share value.

That sets the stage for a rebound and creates an opportunity for investors to double their money in TCF today. Analysts expect the company to grow profits by 28 percent in 2014. At current prices the stock only trades for 15 times 2014 estimated earnings. Plus, at 2 times book value, the stock now is worth $21 a share. With growing earnings, I see the stock moving much higher to my target of $35 -- more than double its current price.

By Jamie Dlugosch

Source: http://money.msn.com/top-stocks/post--3-bank-stocks-to-double-your-money