Most stocks are higher today, but none as pervasive and ebullient as the banks. The working theory is, the EU will not be reduced to ash by Le Pen — because Macron will win. Ergo, the idea that the ECB will lose its mandate is far fetched. So, investors are buying up, seemingly undervalued, bank stocks — especially European.
DB is leading the fray, higher by 10%, followed by BBVA +8%, SAN +7%, ING +7%, BCS +5.5%, OPB +5.2% and UBS +4.8%.
If we were to cross reference some of today’s bank winners against p/b metrics, which is the most reliable form of fundamental analysis to quickly analyze a bank’s worth, the following stocks look cheap.
Typically, anything less than 1.00 p/b is considered ‘cheap.’
ticker/price to book ratio
DB 0.27
BCS 0.40
AEG 0.32
VOYA 0.40
RBS 0.43
BAC 0.70
JPM 1.09
GS 1.00
For some background on valuations, Exodus stores the historical valuations for p/b, p/s and PE. DB has never been cheaper.
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It’s good thing that the market is not rigged at all by central banks and one can safely rely 100% on models cuz fundamentals rule. Proceed….