This Bank Crushed Apple
Oct 15th 2012 3:56PM
Updated Oct 15th 2012 4:02PM
What a year for the little lab out in Cupertino. Apple (NAS: AAPL) boasts the second-strongest brand in the world, and the recent launch of yet another version of its popular iPhone has gone well enough -- problems with Apple Maps aside. It may also be ramping up for a late October launch of a long-rumored mini version of its popular tablet. Shareholders have been rewarded over the past year, with a near 50% return in share price, as well as the reintroduction of a quarterly dividend.
This is all fine and good, but what if I told you about company that has earned Apple-beating returns in an often overlooked industry. The title of this article is a hint, but you might be surprised at the bank that has nearly doubled in price over the past year while shoring up its balance sheet, giving it more growth potential going forward. That bank is Regions Financial (NYS: RF) .
An impressive turnaround
Granted, it's a lot easier for a company to double from $3.63 a share, Regions' price last October 17th, than it would have been for Apple to go from the $421.74 Apple started on the same date. Nevertheless, Regions' performance is worth noting, if only because of its poor performance in the years following the 2008 financial crisis.
Regions wasn't alone in taking money as part of the Troubled Asset Relief Program, and even some of the larger banks that received funds have struggled mightily over the past four years. While all these banks have since repaid their TARP loans, only US Bancorp (NYS: USB) has returned within 5% of its pre-TARP price:
Though not nearly in as rough of shape as Bank of America (NYS: BAC) and Citigroup (NYS: C) over the past four years, Regions has less than stellar results. Its last profitable year was 2007, when it recorded $1.25 billion in income. In the four years since, they have had cumulative losses over $8 billion, but are expected by analysts to return to profitability in 2012, and continuing profitability in 2013.
Are banks finally a buy?
Past performance is no indicator of future potential, but the previous year of Apple-beating returns should not be taken lightly. But is it an indicator that you should be investing in banks? Regions is not alone among banks in its return over the past year, but most of the better performing banks are from the ranks of the smaller regional banks.
In a brief check of a handful of these smaller banks, I found three other banks that also beat Apple's return over the past year. Synovus Financial (NYS: SNV) has yet to repay nearly $1 billion in TARP funds, but it hasn't presented a near 80% appreciation in share price this year. Citizens Republic Bancorp (NAS: CRBC) joined Regions in returning to profitability this year after similar difficulties over the previous four years, and returned over 150% since last October. Finally we have Great Southern Bancorp (NAS: GSBC) , a favorite of Fool analyst Anand Chokkavelu because of its conservative lending and great operational results over the past year, a period that saw its share price appreciate nearly 54%.
Are you too late?
We may look back and lament missing out on the appreciation of banks like Regions Financial over the past year. With such dramatic growth, it is easy to think that it won't see another year of near 100% growth. While I cannot predict the future, a couple of things I've mentioned here could indicate that Regions is not quite done with its recovery. It repaid its TARP money back in April, removing a large liability from the bank going forward. Analysts also see good things going forward for the bank, with profitability expected through at least the end of 2013.
With so many of the big finance firms getting bad press these days, you may be inclined to stay away from the sector entirely, but that could be a huge mistake. In fact, some of the best opportunities over the next few years can be found there, including one small, under-the-radar bank. It's been called one of The Stocks Only the Smartest Investors Are Buying. You can learn about it, and more, in our exclusive free report. Just click here to keep reading.
The article This Bank Crushed Apple originally appeared on Fool.com.Robert Eberhard has no positions in the stocks mentioned above. Follow him on Twitter, or click here to see his holdings and a short bio. The Motley Fool owns shares of Apple, Bank of America, Citigroup, and Great Southern Bancorp. Motley Fool newsletter services recommend Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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