Fifth Third Bancorp (NASDAQ:FITB) — This diversified financial services company, with more than 1,300 branches in 12 states, has received positive reviews from S&P Capital IQ and Morgan Stanley.
Morgan Stanley ranks FITB stock as one of the cheapest in its Midcap Bank coverage universe on an earnings basis, as well as one of the banks in that category that could benefit most from interest rate increases by the Federal Reserve. Its analysts estimate that an increase of 100 basis points in the fed funds rate could result in a rise in net interest income of about 6.5%.
Capital IQ, which has a “buy” rating on FITB stock, forecasts earnings of $1.71 per share in 2015, up from $1.66 in 2014, and estimates $1.80 in 2016.
Technically, FITB stock broke from a triple-top in late May, pulled back to just above its 50-day moving average, and then rallied above its May high this week, confirming the prior breakout.
A total of three buy signals from my proprietary indicator, the Collins-Bollinger Reversal (CBR), and a new MACD buy signal also support the breakout. A long-term buy signal in the form of a golden cross is another strong positive.
The short-term trading target for FITB stock is $24.50, which is 15% above recent prices. A decade ago, in a more favorable interest income environment, FITB stock traded at over $40 per share. Long-term investors could see shares move above $30 again and will also benefit from the stock’s dividend yield, which currently stands at 2.4%.