After getting pounded during 2011, bank stocks have soared this year, especially after the Federal Reserve completed its “stress tests” and said that almost every big bank could survive “extremely adverse” economic conditions.
During 2011 bank stock shareholders experienced the biggest price declines since the financial panic of 2008. As worries mounted over both the European banking crisis and the U.S. foreclosure crisis, the price of many bank stocks were cut in half. Long suffering shareholders in Bank of America watched in horror as the price fell from $15.25 in January to a low of $4.92 in December.
Although Bank of America (BAC) did not hit its low until the end of the year, many other banks stocks started to bottom out and recover in the third and fourth quarters of 2011. From the lows of 2011, many of the biggest bank stocks have now registered gains of over 50%. As a group, the largest banks have vastly outperformed the 11.7% gain on the S&P 500 during 2012 (see chart below).
What bank stock has had the largest gain from both its low of 2011 and year end closing price? The award goes to Bank of America which has now registered almost a 100% gain from its intraday 2011 low of $4.92. Trailing in second and third place for the largest price recovery since the lows of 2011 are JP Morgan Chase (JPM) and Citigroup (C) with respective gains of 60.0% and 58.8%.
Listed below (in no particular order) are 8 of the largest banks showing price gains for 2012 and from the lows of 2011. Many analysts, impressed by the bank stock rally, are now predicting further price gains for bank stocks. Based on the extreme volatility in the financial sector since the Crash of 2008, taking a bullish position on bank stocks is indeed a heroic call.
|BANK/TICKER SYMBOL||12/30/2011||3/16/2012||2012 GAIN/(LOSS)%||%CHG FROM 2011 LOW|
|BANK OF AMERICA / BAC||$5.56||$9.80||76.3%||99.2%|
|CITIGROUP / C||$26.31||$36.69||39.5%||58.8%|
|JP MORGAN CHASE / JPM||$33.25||$44.57||34.0%||60.0%|
|WELLS FARGO / WFC||$27.56||$33.89||23.0%||50.0%|
|US BANK / USB||$27.05||$31.65||17.0%||55.8%|
|TD BANK / TD||$74.81||$84.29||12.7%||30.6%|
|CAPITAL ONE / COF||$42.29||$54.50||28.9%||51.6%|
|S&P500 / SPX||1257.6||1404.17||11.7%||30.6%|