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Fools, FITB will do well...

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November 24, 2010 – Comments (13) | RELATED TICKERS: FITB

Just got back home from a quick trip to the nearest Fifth Third Bank branch office.

I still can't believe how nice everybody was. The lady who was helping me get copies of some records I needed on an account I closed a year ago, got everything for me with a smile, didn't charge me for the stuff she printed out for me, thanked me for my patience (What patience? I was in and out in 5 min.) while she shook my hand and wished me a Happy Thanksgiving.

And while there, quite a few times I heard the tellers greeting the customers and saying: "I don't need to see your license, I know who you are." You could tell people liked that a lot.

Fools, let me tell you something: You will never get treated like this at Chase (they charge you for having no charges on a no-charge checking account. Every Good Morning or Hello they have to tell you is additional $5 in charges).

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However, being a very personal bank is not the only reason I think FITB will do well.

FITB is also one of my Volume Story stocks, and I believe in the Volume Story a lot (I think you should too).  

Since September 27, 2009, when the Volume Story portfolio of 10 stock was first created, FITB has returned 27%, while S&P500 return for the same time frame is at 14.5%. Not bad, I'd say, but not as good as some of the other stocks from this same portfolio.

But don't get fooled into thinking FITB will always be a "laggard" (yes, outperforming the market 2:1 can be considered a lagging performance when it comes to Volume Story stocks).

What we have to keep in mind is that FITB used to be a $1 stock back in March of 2009, and is at $12 right now. That's a 1,100% return in a little bit over 18 months, Fools. Eleven hundred percent.

Just like I tried to explain here in Are GNW and BAC dead stocks walking, some of the stocks that had huge gains one year, have to take a breather for a while before they can continue hitting new 52W highs again. It's just how things work, most of the time.

Eventually (maybe already next year?), I think FITB will be a $25+ stock. I honestly do think so. We'll see what happens.

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Here are now returns for all 10 stocks from the Volume Story portfolio:

LVS +188

TCK +89%

HWD +55%

CENX +52%

GCI +36%

FITB +26%

CNO +16%

BPOP +4%

GNW -2%

GTN -23%

 

To summarize, I think you should keep an eye on Fifth Third Bank. I like it as a possible investment, and I also like what I experienced at one of its locations today. Nice people might create some nice returns for us. :)

Good Luck and Happy Thanksgiving Everybody!

13 Comments – Post Your Own

#1) On November 24, 2010 at 4:09 PM, davejh23 (< 20) wrote:

Interesting.  There are no FITB branches where I live, but I have family that banks with them in Ohio.  After the Lehman collapse, I remember seeing several articles that listed FITB as one of the worst banks...certain to fail.  I passed these on to my family.  I haven't seen any news on them for a long time though. 

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#2) On November 24, 2010 at 4:37 PM, TMFAleph1 (94.91) wrote:

FITB may have good service, but it also has some of the lowest capital ratios of the 19 'too big to fail' institutions that underwent stress tests last year. Furthermore, they have yet to repay the government's TARP investment. As such, I think a dilutive share offering is not unlikely.

In addition, I think FITB will struggle to convince the Fed to allow it to raise its dividend in the immediate future. This alone would suggest the stock will continue to underperform those its peers.

Alex Dumortier

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#3) On November 25, 2010 at 12:42 PM, TMFBabo (100.00) wrote:

Hey dragon, would you be willing to show any insight on the timeframes you look at for volume? I can sorta see what you see because you do post charts with price and volume, but I'd like your take on how you use that specifically to make decisions on when you think the price is headed for a wild ride up.  Ex: do you look at a week? a month? a few months? I just have no clue.

I ask because while I haven't kept track of volume in my picks, I have always wanted to make it one of the many things I consider when picking a stock.  I think it would help me avoid bad entry points, for one.  I know it's a big part of your game and you're obviously onto something because you've created outperformance with the volume story.  

Any insights would be much appreciated.  We'll probably have to have a couple back-and-forth discussions for me to fully get it, as I am a noob in this area.  

Just to kick things off, a certain stock, its chart, and what you do or don't like about the volume story would be helpful to kick things off.  Even better would be one you like, one you don't like, and one you think is neutral.  

I know it seems like we disagree on a lot of things, but this is an area where I'd be happy if you schooled me a bit because I'm curious about your volume story.  

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#4) On November 26, 2010 at 12:18 AM, dragonLZ (99.57) wrote:

davejh23, I live in Michigan, and over here it seems like FITB will be OK.

TMFMarathonMan, I think you have a very valid point. 

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#5) On November 26, 2010 at 1:03 AM, dragonLZ (99.57) wrote:

TMFBabo, I'm glad you are showing interest in the Volume Story, and I will try to help (but I don't know if I'll be able to).

Ex: do you look at a week? a month? a few months?

It depends. Contrary to what many think (based on my picks), I consider myself a long term investor. Sometimes, it takes 6-9 months for a stock to make a significant move after it had its initial abnormal volume jump (that's why I usually spread my purchases over a few months - I have a Sharebuilder account). However, in 2009, I was no stranger to seeing 30-50% jumps in stocks I bought just a day before. Unfortunately, in 2010, I had no such luck.

 

Just to kick things off, a certain stock, its chart, and what you do or don't like about the volume story would be helpful to kick things off. 

Right now, I can't think of any, neither good nor bad volume plays. Lately, I haven't really done much research (almost zero), but expect to do so real soon. If you keep following this post, I'll alert you when I think I "found" something interesting.

For right now, it might not be a bad idea to keep an eye on the stocks I listed in my Volume Story 2, from 6/23/10. Not because I think these are good picks at this time, but just to see if the Volume Story really works (that the first one wasn't just a fluke).

Here are the returns for those 6 stocks so far:

HL +60%

GRT +25%

HT +25%

ABCB -1%

IAG -7%

CRUS -9% 

Good Luck!

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#6) On November 26, 2010 at 11:19 AM, TMFBabo (100.00) wrote:

Interesting, I thought the volume story had a bit shorter timeframe.  I guess that's how I'd use it myself.  As I said before, I'm mainly interested in incorporating it into my entry prices.  

For example, if a stock is trending down and the volume is picking up, it could be selling off.  I find it hard to stay away from stocks that are freefalling into my acceptable purchase ranges, even if they've only just begun falling.  Whether I buy anyway or not depends on each particular situation.

I do miss those days of 2009 just like you.  I traded way more than I should - I was fewer than 6 months into my individual stock-picking, so my plan of attack was...lacking. I remember that I'd often sell after the minimum 3 days (waiting for previous sales to settle) to buy something else. I remember I got 75% after 3 days once and a whole slew of 50% gains after just 3 days.  

I don't think we'll see those days again until major market panic (Dow 7500 for today's market). A good portion of my portfolio is long, so I won't feel bad if we don't get 7500 again.

Anyway, I'll pay attention to this thread if you would post a good or bad volume story and why you do or don't like it.  It would be much appreciated. 

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#7) On December 02, 2010 at 11:31 PM, dragonLZ (99.57) wrote:

Babo, just as an example, I like PWER based on its volume.

I know it might look like it's way too late to get into this stock, but if the Volume Story works, this stock might be at $17-$18 in no time. Long term, maybe much higher...

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#8) On December 02, 2010 at 11:42 PM, dragonLZ (99.57) wrote:

If one is focused on short term plays, I think PSS had a very nice volume move today.

I know it might seem stupid to get into a stock after it had a 16% jump in one day, but PSS is still 24% off its 52W high. Today's 8 mil volume was 7 times the average volume.

If one can accept a possible 10% paper loss over the next week, 20-30% gain in a month or two is not out of question. I think...

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#9) On December 02, 2010 at 11:46 PM, dragonLZ (99.57) wrote:

RGC up 5% on 5X average volume. Still 22% off its 52W high.

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#10) On December 02, 2010 at 11:50 PM, dragonLZ (99.57) wrote:

CVI had a nice volume jump less than a month ago.

I like it long term.

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#11) On December 05, 2010 at 2:32 AM, TMFBabo (100.00) wrote:

How do you define long-term? By the way, thanks for keeping me in mind and coming back to this thread.

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#12) On December 06, 2010 at 8:07 PM, dragonLZ (99.57) wrote:

Anything over a year is long term in my book. 3-5 years would be perfect if one is lucky to buy at the bottom (like first half of 2009). 

Thanks for showing interest.

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#13) On December 10, 2010 at 4:00 PM, dragonLZ (99.57) wrote:

As FITB's share price has appreciated 21% since I wrote this post on Nov. 24, while S&P went up "only" 3.5%, I don't think we can call FITB a laggard any more...

Good Luck Everybody! :) 

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