Trade of the Day: SunTrust Banks, Inc. (STI) Stock Is a Golden Investment

SunTrust Banks, Inc. (NYSE:STI) — This regional bank is one of the largest, with branches in 11 states. Its focus, however, is on Florida, Georgia, Virginia and Tennessee.

Even under an overall low interest rate environment, this regional bank is effectively executing its plan to grow loans and increase mortgage banking while growing investment management services. It has also effectively increased service charges, but holds expenses well below its growth in revenues.

Standard & Poor’s raised its estimated 2017 earnings per share to $3.82 from what was a modest $3.66. They start 2018’s EPS estimate at $4.24. STI reported fourth-quarter EPS of 90 cents, up 2 cents from forecasts. Revenue growth was assisted by investments that resulted in revenue growth that was partly offset by growth in provisions for losses.

I last reviewed this bank in August, concluding that it appeared to be at a reasonably low price and good value at $42 for a trade to $50. The stock broke resistance in November at $48 and by March breached $60.

Since its high, STI has undergone a consolidation that double-bottomed at about $54. Recently volume has increased, and yesterday it challenged the resistance line and 50-day moving average at about $57. Since a breakout appears imminent, STI is a good value at $57 for a trading target of $65.

A stop-loss order should be placed below the double-bottom at $54. This regional bank stock has an excellent history of growth and is therefore also an appropriate investment for long-term buyers.


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