5 Midget Banks I'm Watching

With the breathtaking run-up in larger banks like Wells Fargo and Bank of America, many traders are now looking at the smaller, lower quality names in the banking sector for back-from-the-dead survival plays.

Above is a quick comparison I’ve put together of some of the second/ third tier banks, the ones with more regional exposure to construction loans, commercial real estate debt, etc.

Looking at the percentage discount they are trading at from their 52 week highs, the knee-jerk reaction would be that these names could “have room” for further gains.

But that’s why I’ve also included the percentage these stocks have already gained from their 52 week lows…while BAC, GS, and WFC have gotten a lot of the attention, there have been face-melting gains in these lower quality banks already. 

Fifth Third (FITB) was probably the riskiest buy during the crisis, but the courageous have already been rewarded with a 900% return!

I haven’t done enough work on these five names yet to determine if any of them are worth the risk of a long position, but the action is definitely worth following, even if from the sidelines for now.

Full Disclosure:  I am not currently long or short any of the above mentioned stocks in either personal or customer accounts.  Nothing contained in this post should be considered investment advice, research or an invitation to buy or sell any securities.  All data contained herein is publicly available and reflects the closing values as of 8/18/2009.  Please see my Terms & Conditions page for a full disclaimer.