2 bank stocks with plenty of upside

If you want to be long financials, these shares have room to run.

By Jim Cramer Dec 18, 2012 10:02AM

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John Foxx Stockbyte Getty ImagesPerformance envy?

 

After a day like Monday, plenty of people are way out of position versus the averages and frantically grabbing anything that moves. One look at Citigroup (C) and Bank of America (BAC) tells you that. They have gone from being pariahs to being darlings. They are both well behind the group, and even though Bank of America is up hugely this year, almost double, it remains deeply depressed versus its old levels.

 

I point these two out because if you decided that you wanted to be long the financials, you can buy a million shares of either right on the line.

 

To review, Citigroup had just had a terrific quarter when they canned Vikram Pandit. I have been back and forth with a half-dozen very in-the-know people in the last five days and they simply didn't see it coming. The combination of a return to worldwide growth and the heavy-handed cuts that were made both domestic and international should make for an even better quarter and I have to believe that what is still stuck in Citi Holdings has really come back.

Bank of America is all about loss-stemming and how much money would be available if it simply didn't have to worry about any more lawsuits. You put an end to those and you will see this stock trade higher still.

 

The same goes for homebuilders. We got research last week that talked about how the homebuilders would be the hardest hit stocks when we go over the fiscal cliff. So, once again, even though the comparisons should be very good next year and the group's coming out of recession with a vengeance, the shorts came back and the longs fled.

 

Now they are rebuilding positions.

 

In every case I would tell you there is a better day to buy, but unless we get a definitive breakdown in fiscal-cliff talks, you have to believe that these stocks will be the ones that people come back to if they are worried about underperforming their peers.

 

Cramer's face

 


Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.  

 

 

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27Comments
Dec 18, 2012 2:24PM
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next time up - I agree with you 100%.  It's the darned high unemployment that is keeping a lid on everything and distorting things.  Never before have we had such high unemployment for so long.  No job = no money to spend on stuff = deflation.  Obama thinks he can "socialize" his way to prosperity & Bernanke thinks he can "print" his way to prosperity.  They're both pushing a string up a hill.  The insanity continues.

Dec 18, 2012 6:18PM
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BEWARE THE SHYSTER...he said sell BAC  at 5 which was....you guessed it ....right at the low
Dec 18, 2012 12:40PM
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Bank of America is a joke.  They think customer service is providing a key to the bathroom.
Dec 18, 2012 5:16PM
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Both of these despicable institutions have derivative exposure multiples of ACTUAL capital holdings.The only thing holding this ponzi  scheme together is 0% interest rates and $85 billion in treasury and MBS purchases every month by the Bernank. Bobo is a stooge.Keep your fiat in the casino gulag at your own risk.
Dec 18, 2012 2:33PM
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I would also recommend folks listen very carefully to how they phrase this "cliff'  settlement.  We are in a very vulnerable situation in an emotional sense. Many Many very angry people are roaming the country now.  We only need a catalyst in my opinion.  Like the shootings at Kent State were the tipping point for the Vietnam war perhaps the shootings in Conn.  will raise a social eyebrow and raise awareness to the Corporatism running wild through the halls in DC.  I know many here feel Unions are the enemy, and in some cases rightly so, but remember what we are seeing now is the flipside of labor power and they don't have any better record than unions at self discipline.  This corporatism mentality can also get way overblown and out of control in the opposite direction.  At some point in time  Americans will have to come together.  A divided house will not stand.
Dec 18, 2012 12:43PM
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I should based all my stock tips to others, on what I'm selling...

For a while I would only sell 30-50% of a postion, on my wife's recommendation...

For the most part she knows nothing about investing in Wall Street...Doesn't care, just thinks it's a "latent, gambling habit.".....She is somewhat correct....Pulling the handle or pushing the button on a limit order, can sometimes be a rush...I concede.

In the past, dumping "all positions" on what I considered good information and bad fundamentals has come back to haunt me occassionally...Sometimes with the equity appreciating 5% in days.

Such what has happened once again recently...

Selling all positions on 3 different orders of Boyd (BYD) Gaming only to have it gain about 15-16% within 10 days of the sale....No good reasons...Gaming is at an all time low, especially on East Coast/Jersey...Stock Scouter on MSN rates a 2 out of 10 and a "moderate sell" ... And revenues and profits have not met expectations...Still it has went up.

So the next time I decide to sell, maybe I can possibily help others...??

Same happend a while back with SirriusXM(SIRI), but I sold several blocks of a few thousand and it has since went up about 20%, but not to cry over spilt milk, because we had done quite well on it.

And we seldom deal with many low priced equities because of volitility....And day traders.

But like the slot machines and roulette wheels...You have to have a rush, once in awhile. 

Dec 18, 2012 12:51PM
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Gold and the Dow are now disconnected and in the wrong direction for me.  Watch out now.  I guess i was clearly warned.  Wow look at that thing go down.  In the long run this is good but for the short term get out what you can.  JMHO
Dec 18, 2012 1:28PM
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I tried to warn you all at Anthony Mirhaydari's article "Trouble ahead for gold and silver" but everyone laughed at me.  I thought Anthony was right for a change because there just isn't any inflation showing up.  Another thing he didn't mention and that no one has mentioned, is that eventually when a "Fiscal Cliff" deal is reached - whatever it is - it could potentially strengthen the dollar because it could be viewed as the U.S. taking a step towards getting it's house in order, if that's even possible.  Plus, QE4 is continuing to pump money into the system & that moeny will find it's way into financial assets.  You want to be in financial assets like stocks now.  It's a very odd situation that I don't think many have ever seen before - Fed pumping dollars into economy & no inflation.  Oddly, interest rates have been inching up a bit.  Very strange.  Don't know if Gold is done though - some of that excess liquidity might still find its way into gold?  But for now, the "gold" thing isn't working anymore.
Dec 18, 2012 1:02PM
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"In the long run this is good but for the short term get out what you can."

Snap out of it... use your wisdom, research and experience to revive something you can get behind on your Main Street and do your best to cut the legs off long-term organized corruption on Wall Street to help restore America. Second day UP on more fiat money printing a dead Fed promises to keep us suppressed. Ask yourself... do you really think a Fiscal Cliff solution will do anything at all for Main Street? Close the banks, end the Fed, get RID of Wall Street and recover jobs by throwing hired-in management out of the country. Right now... we can spell America- G R E E C E because we have followed the exact same course into a Black Hole of Death.  
Dec 19, 2012 6:45PM
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I would never buy BAC, C, JPM or any other of those crooked bank stocks that have raped the US economy while being subsidized on FED welfare over the last 4 years and paying depositors 0% on savings. Those organizations should've been nationalized in 2009 and put out of public business,
Dec 19, 2012 12:01AM
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GLD has quite a bit more to drop. If you look at the chart, there is a big gap between 158.50 and 157.50. I believe that this time it is going to fill that gap, may be by the end of the year or the first week of January. When that happens, it will be a screaming buy at around 158 with very little down side risk and a huge upside potential. Let us see what happens. Good Luck.
Dec 18, 2012 12:03PM
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That's ridiculous! YOU think Citi and B of A have long-term futures? In what- bankruptcy?

The Financially-Controlled Government of the Former United States now New World Order Group with nearly 400 million SLAVES in it... has spent YEARS bailing these losers. NO AMERICAN BANK is trusted by REAL Americans. We threw the baby out, pissed in the bath water and call it some sort of egghead financial business move. There are other articles actually promoting the Euro as being solvent now. THE WORLD OWES A QUADRILLION IN CURRENCIES OVER BAD FINANCIAL FOLLY AND BARS RECONCILIATION. You want to promote a bank stock, Jim... show us the third-party audit. Otherwise, quit pumping SLIMEBALLS.

Dec 18, 2012 10:56AM
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like buying oil stocks, i figure banks are even stronger base.  especially the TBTF ones. 

 

you can thank BofA's purchase of Countrywide for their slower performance, but they will recover.  their fingers are in USA like a nasty cancer and can not be removed

Dec 18, 2012 3:11PM
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I could see BAC going way up.People forget awful fast the problems they have

had.Over a 10 year span probably a really safe stock is Wal.

Dec 18, 2012 1:33PM
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"U.S. private equity firm is selling its investment in gunmaker Freedom Group, whose AR-15 rifle was used in a U.S. school massacre last week, following pressure from a major investor. The California State Teachers' Retirement System (CalSTRS) said on Monday it was reviewing its investment with Cerberus in the wake of Friday's shooting in Newtown, Connecticut which claimed 27 lives, including 20 school children. CalSTRS, the second largest pension fund in the United States, had invested $751.4 million with Cerberus by the end of March 2012, according to its website.Cerberus said on Tuesday it would hire a financial adviser to sell its interests in Freedom Group and return the proceeds to investors.

The private equity firm expressed shock and grief at the killings, while adding Freedom Group was not responsible"


OUR PROBLEM is... that yes, the Fund Group who owns a firearms maker IS responsible. When financiers bought stock in Chinese companies undermining our own because they opposed represented labor, that was a crime too. When you own cigarette maker stock and people die of cancer, you are responsible. WHAT WE LACK is more legal representation and fewer Law Firms working with Fund Groups and forming a separate society detached from our primary society. We don't accept the "selling" of Freedom Group to [likely] some dark group who keeps making assault weapons, we accept that Cerberus CLOSES AND LIQUIDATES Freedom Group because it has no connection at all with FREEDOM, it vicariously killed kids.

Dec 18, 2012 2:46PM
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The American Public still believes in the Banking system as their friends and allies !  Fact is our regulatory agencies died years ago and the Banks are one massive Criminal Cartel !  TO BIG TO FAIL=TO BIG TO JAIL= The end of the American Democracy ! Now there is Hope and Change that       YOU CAN BELIEVE IN   !
Dec 18, 2012 2:28PM
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If you feel the need to own an assault weapon because you "fear your government" you have an undiagnosed mental condition and should seek treatment.
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