3 Regional Banks That Offer Strong Value in 2021
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The regional bank sector got a lift recently as the TFC Financial was absorbed by Huntington Bancshares (NASDAQ:HBAN). This is a relatively common occurrence among regional banks as they try to capture a larger market share and/or geographic footprint.
In fact, the possibility of mergers and acquisitions is one thing that makes regional banks an attractive investment opportunity. Although, when it comes to bank stocks, much of the attention is focused on the “big banks.” That is banks like JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC).
However, in our current economic environment, investors would do well to look at regional bank stocks. These are affordable stocks that in many cases pay relatively high dividends.
But is HBAN stock a great buy among regional banks? At this time, there still appear to be some better buys among the regional bank stocks. And one reason has to do with short interest being relatively high for HBAN stock on the heels of the merger. In this article, we’ll give you three selections that appear to have strong upside for the rest of 2021.
Citizens Financial Group (CFG)
The first regional bank stock we’re recommending is Citizens Financial Group (NYSE:CFG). The stock has performed well during the pandemic. In the last 12 months, the stock price has climbed 75% and is up 12.2% in 2021.
The consensus price target of analysts suggests that CFG stock may be tiring out. However, recent analyst reports give CFG stock a price target that is significantly higher than its current level. And, overall, CFG stock has earned a Buy rating. Citizens also pays a reliable dividend that currently pays out $1.56 annually with a dividend yield of 3.27%.
From a technical standpoint, CFG stock appears to be forming a bullish pattern with prices consolidating and the stock showing a slight pullback in the last month.
The next regional bank we’re looking at is KeyCorp (NYSE:KEY) and the key reason is the company’s projected earnings growth. KeyCorp’s earnings per share have grown at a rate of 6.6% in the past three to five years. The bank is also projecting earnings to grow over 70% in 2021 and to grow at a rate of 23% which is more than double the industry average of 11.5%.
For investors who love analytics, KeyCorp recently acquired AQN Strategies, a client-focused analytics firm that will enhance KeyCorp’s commitment to use a data-driven approach to grow its business.
Analysts have a consensus rating of Hold on KEY stock however they suggest that KEY stock may rise over 13% in the next 12 months. That compares favorably with the stock’s 58% growth in the last 12 months and 33% in 2021. Plus, the stock pays a reliable dividend that currently has a yield of 3.41%.
Truist Financial Corporation (TFC)
I could say I saved the best for last when putting Truist Financial Corporation (NYSE:TFC) last on this list. One reason for my bullishness is location. Truist operates primarily in the Southeastern United States which was one of the first to fully reopen. And, this is an area that is seeing a high influx of new residents migrating from other states.
But the only reason to jump on board any bank stock is for its growth. And Truist has shown plenty of that lately. That growth has led to a 37% rise in TFC stock in the last 12 months and 19% growth in the last year. Part of this is due to strong earnings per share growth that has been spawned by cost-cutting measures.
Analysts are projecting a consensus 12-month price target that shows slower growth. But that has to be taken with caution. Recent analyst reports give TFC a much higher price target.
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