Cheap Stocks: Regions Financial (RF)
RF Stock Price: $10.06
Regions Financial (RF) is another regional bank stock that hasn’t done much in the year-to-date, but cheap shares and rising profitability will soon take care of that.
RF stock is being held back by a softer mortgage market, and there’s no telling when that will end. But other areas of the business are doing just fine thanks to a pick up in the economy, especially in the Southeast where RF operates.
Higher net interest income and the promise of higher interest rates are also tailwinds. Then there’s RF’s cost cuts, which are serving the company well until it can start growing the top line again. Indeed, RF is expected to increase earnings this year and next despite lower revenue.
Perhaps most importantly, RF has a strong capital position, even if the P/B of 0.9 means the market doesn’t appreciate it yet. The P/E of 12.7 reflects some interest-rate risk — as bank stocks always do — but it’s also a hangover from the financial crisis. Expect expansion by this time next year. As with KEY stock, the forward dividend yield of 1.9% has room to grow.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.