Should You Follow this Analyst into Bank Stocks?

Banking analyst Dick Bove made a strong statement regarding bank stocks yesterday in a CNBC interview when he said, “I think you should be buying these stocks hand over fist.” Bove said investors should be viewing the falling bank industry stock prices as an opportunity to purchase shares at an undervalued price, not selling when the market “freaks out.”

Bank stocks have been especially sensitive to the European debt crisis turmoil. The KBW bank index (NYSEARCA:KBE) shows bank stocks are down 24% since their high in July and 28% this year. Bove believes the stock price is not an indicator of what is really happening in the industry and said, “If we look at what’s happening now in the world today for banks, everything is moving in a positive direction.”

Bove continued by saying, “”On a fundamental basis, it’s almost impossible to believe that these stocks are not dramatically underpriced. However, the market continues to freak out over every conceivable thing that they can come up with. No matter what it is, it’s bad for the financial industry.” Bove recommends Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS), State Street (NYSE:STT), and US Bancorp (NYSE:USB).

Here’s how these stocks are trading:

Bank of America Corporation (NYSE:BAC): BAC shares recently traded at $5.78, down $0.02, or 0.34%. They have traded in a 52-week range of $5.13 to $15.31. Volume today was 227,038,577 shares versus a 3-month average volume of 293,308,000 shares. The company’s trailing earnings are $-0.31 per share. Get the most recent company news and stock data here >>

Morgan Stanley (NYSE:MS): MS shares recently traded at $14.21, up $0.08, or 0.57%. They have traded in a 52-week range of $11.58 to $31.04. Volume today was 28,199,884 shares versus a 3-month average volume of 33,832,200 shares. The company’s trailing P/E is 9.32, while trailing earnings are $1.53 per share. Get the most recent company news and stock data here >>

State Street Corp. (NYSE:STT): STT shares recently traded at $38.50, down $0.04, or 0.1%. They have traded in a 52-week range of $29.86 to $50.26. Volume today was 4,815,999 shares versus a 3-month average volume of 5,681,290 shares. The company’s trailing P/E is 12.07, while trailing earnings are $3.19 per share. Get the most recent company news and stock data here >>

U.S. Bancorp (NYSE:USB): USB shares recently traded at $,. They have traded in a 52-week range of $ to $. Volume today was shares versus a 3-month average volume of shares. The company’s trailing P/E is , while trailing earnings are $ per share. Get the most recent company news and stock data here >>

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