Barron's Finanical Stock Picks
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Date updated:09-20-2008

Special Report: Where to Put Your Money Now - Not all financial stocks are created equal. Here's what to buy -- and avoid.

symbol name last price % change open
  • +
  • MS
    Morgan Stanley
  • $32.10
  • -0.65%
  • $32.42

Both Morgan Stanley and Goldman shares look reasonably priced, with Morgan Stanley now trading below its book value of $31 and Goldman at 1.3 times book value. It's tough to peg earnings for both companies given the volatile markets. But if they earn a 15% return on equity, Morgan Stanley would net about $4.50 a share and Goldman, $15 a share. That suggests Morgan Stanley trades for six times normalized earnings and Goldman, 8.5 times earnings, although an assumption of a 15% ROE could be optimistic in the current environment. "The independent investment banks -- Morgan Stanley and Goldman Sachs -- can survive and they must survive," says Byron Wien, chief investment strategist at Pequot Capital Management in New York and a former Morgan Stanley strategist. "Their survival is critical to New York as a financial center and to the health of the entire financial system. The culture of an investment bank is different from that of a commercial bank. I want to see the investment-bank culture preserved."

People owning MS also tend to own: ACEBACCCBCOPCVXDIS

TheStreet.com Rating: No Rating What is this?

  • +
  • GS
    Goldman Sachs Grp
  • $170.01
  • -1.63%
  • $171.40

Both Morgan Stanley and Goldman shares look reasonably priced, with Morgan Stanley now trading below its book value of $31 and Goldman at 1.3 times book value. It's tough to peg earnings for both companies given the volatile markets. But if they earn a 15% return on equity, Morgan Stanley would net about $4.50 a share and Goldman, $15 a share. That suggests Morgan Stanley trades for six times normalized earnings and Goldman, 8.5 times earnings, although an assumption of a 15% ROE could be optimistic in the current environment. "The independent investment banks -- Morgan Stanley and Goldman Sachs -- can survive and they must survive," says Byron Wien, chief investment strategist at Pequot Capital Management in New York and a former Morgan Stanley strategist. "Their survival is critical to New York as a financial center and to the health of the entire financial system. The culture of an investment bank is different from that of a commercial bank. I want to see the investment-bank culture preserved."

People owning GS also tend to own: AOBCOGOCRYPGELGLWGRMNMDRX

TheStreet.com Rating: C What is this?

  • +
  • PNC
    P N C Fin Svcs Gr
  • $54.84
  • -0.72%
  • $54.78

IT WOULD BE WISE, at this juncture, to avoid chasing the shares of leading regional banks, several of which hit new 52-week highs on the opening Friday. Richly priced regionals include Wells Fargo (WFC), US Bancorp (USB) and PNC Financial (PNC).

People owning PNC also tend to own: CARCOFCOPDOWFRNGISHD

TheStreet.com Rating: C+ What is this?

  • +
  • WFC
    Wells Fargo & Co
  • $27.87
  • -1.59%
  • $28.21

Wells Fargo, for instance, trades at 39.80, double its July low. It commands 19 times projected 2008 profits of $2.12 a share, 17 times estimated 2009 profits and nearly four times tangible book value.

People owning WFC also tend to own: ACEBACCCBCOPCVXDIS

TheStreet.com Rating: C What is this?

  • +
  • USB
    Us Bancorp
  • $23.29
  • +0.69%
  • $22.95

US Bancorp (USB), at 38, commands 17 times projected 2008 profits of $2.24 a share, 15 times estimated 2009 profits and six times tangible book.

People owning USB also tend to own: ACEBACCCBCOPCVXDIS

TheStreet.com Rating: C What is this?

  • +
  • BBT
    Bb&t Cp
  • $24.60
  • -0.32%
  • $24.58

The market was buzzing Friday with talk that many regional banks will take advantage of the lift in their stock prices to raise new capital in the next two weeks. With the market for preferred shares in shambles, banks probably will have to raise common equity. Potential candidates for equity issuance include Bank of America, BB&T (BBT) and Zions Bancorp (ZION).

People owning BBT also tend to own: AMDCOPDUKFIBMMRKMSFT

TheStreet.com Rating: C What is this?

  • +
  • ZION
    Zions Bancorporat
  • $12.55
  • -1.49%
  • $12.68

The market was buzzing Friday with talk that many regional banks will take advantage of the lift in their stock prices to raise new capital in the next two weeks. With the market for preferred shares in shambles, banks probably will have to raise common equity. Potential candidates for equity issuance include Bank of America, BB&T (BBT) and Zions Bancorp (ZION).

People owning ZION also tend to own: ASHATGBACCBMNINFBNI

TheStreet.com Rating: D What is this?

  • +
  • BAC
    Bk Of America Cp
  • $16.09
  • +0.06%
  • $16.03

The market was buzzing Friday with talk that many regional banks will take advantage of the lift in their stock prices to raise new capital in the next two weeks. With the market for preferred shares in shambles, banks probably will have to raise common equity. Potential candidates for equity issuance include Bank of America, BB&T (BBT) and Zions Bancorp (ZION).

People owning BAC also tend to own: AAADPAVPBRK-BBUDCSCOCX

TheStreet.com Rating: C- What is this?

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