Given the rate that banks continue to fail in 2011, bank picks have more risks than many sectors. But….we small cap traders love risk.
One stock that I think could be a better risk is Synovus Financial Corp. (SNV). The bank has taken its lumps, along with the entire industry, but appears to have weathered the storm. I blogged it back in November of 2009 when it was around $2.23. Patient investors only had to 4 months for the stock to hit $3.85….a 72% gain
SNV could be primed to make another move…imo.
SNV is a super-regional bank holding company with approximately $30 billion in assets and is based in Columbus, Georgia. a diversified financial services and bank holding company, provides commercial and retail banking, financial management, insurance, and mortgage services in Georgia, Alabama, South Carolina, Florida, and Tennessee
To the Chart:
The first thing I notice with this chart is the Ascending Triangle pattern (as notated on the chart). The stock is trading between its 50 and 200-day MA’s with the 50-day on top. The MACD, while still below the zero line, has made a cross and is showing bullish momentum. The Stochastics are bouncing out of oversold conditions and it appears that some accumulation is going on.
Synovus is a crappy bank that has yet to make a profit during this turnaround. When I spoke with company personnel in 2009 for my previous blog, the person I spoke with said they had hopes of turning a profit in 2010. That DID NOT HAPPEN…however, the bank has done some great work cleaning up its balance sheet. However with almost a BILLION dollars of Obama’s money under TARP, SVN is under pressure to pay that back. They can either float another dilutive stock offering or put the bank up for sale. I am rooting for the second option.
SNV has over $4.70 in cash per share, has paid down some debt and has taken massive writeoffs to get their capital coverage ratios in line with banking guidelines. However, not everything is rosy with the bank. Short interest continues to be very high with over 8% of shares short as of 2-15-11. That number has come down, but is rather high.
SNV is not a stock to buy in your IRA, but its volatility makes it a nice stock to trade.
Here is what I am looking at for entry/exit points:
Last Close: $2.55
Buy Opinion: $2.50 and above (watch the chart and make sure the momentum is going your way)
Short Term Sell: $2.90′s (Watch to see how much momentum the stock has when it approaches resistance at around $2.90)
Long Term Sell: $3.50+
Good Luck and Great Trading,
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