Since this is "Find Cheap Bargains", I feel like I can use this forum to issue a bit of stock advice at times. Although, I am not a broker, and I do tend to hold some of the stocks that I talk about here. So the risk of investing is still all on you, and not me 🙂
That out of the way, I really like investing in banks. As someone with a major in finance and having worked in banking for the better part of 19 years, I feel like I understand how they work. And that's key to being a better investor. In fact, understanding what you are investing in is probably the primary key to take into account before you even start.
So I pull up my screener on Finviz and see what's available today. This particular screen is for:
- Price to Book ratio under 1 with a low entry price ($1 to $5)
- Positive Dividend
- Positive Growth estimates
- Debt to Equity under 1
- PEG under 2
It's also important that the average volume and current volume are over 500,000. I want the stock to have some life to it, and 500,000 is the minimum for me. I do prefer over a million.
If you look at the screen as of today (03/09/13), only one stock is there. And that's Synovus (SNV). Synovus is a bank holding company based in Columbus, Georgia. Investors will note that Georgia-based banks took a huge hit in the meltdown of 2008-2009, with few left standing. Synovus was spared, being "too big to fail".
And they are doing well with bad loans being removed from their books, chances of repayment of the TARP coming this year, and I see a return on shareholder equity of 34.47% listed. So all appears to be doing well.
The company is also a 25% owner of TSYS (TSS). TSYS is a card processor for major banks and is an up and coming competitor to FDR. So in addition to whatever banking aspects Synovus has going on, they also have the profits of a sister company rolling in.
If you follow along on the chart , you'll see the roller coaster ride of the stock starting last June. I moved into the stock at the end of 2012 with selling occurring on the four peaks you see at the end. That does include Friday when we hit the high of 2.82. Well, actually it went to 2.84 (2.83 bid) and I sold at 2.82.
SNV is a cheap stock and I recommend taking a look at it before they repay TARP. That is quite frankly the only thing holding it back at this point. Me personally, I am rotating in and out of the stock as it closes in on these highs. In actuality, I thought I missed the high on Friday because it pumped upwards only to fall back early in the morning. But it came back and I sold. I fully expect to get back in around the $2.60 mark.
Some might remember the post I wrote a week or so ago about the Dilbert Principles of Personal Finance. Today's post appears to go completely around those principles, but in actuality it does not. I enjoy trading stocks and only do what I described above with money I don't need for any other purpose. This is not something I can actively suggest for retirement accounts or money that is going to be needed. The risk of the stock turning down rapidly doesn't appear to be there, but it could very well turn sour quickly.