Stock market experts would know that grading systems are quite important for understanding the true value of a stock. When you're carrying out conventional or online stock trading, it helps to keep such grading systems in mind before making decisions.
When it comes to investing there are obviously two basic approaches in selecting stocks. One is the bottom-up method which involves selecting a company and then reaching out to the industry and other worthy stocks from that company, while the latter approach called the top-down method involves selecting an industry and then examining and selecting stocks within that industry. The banking industry is invariably an industry that will be considered in a top-down approach. Stock market analysts from GuruFocus believe the following banking stocks are worthy ones for the enterprising investor.
Bank of America Corp. (BAC) would work better for the investor who is more enterprising and less defensive. When following the grading system known as ModernGraham, BAC gets an intrinsic value that is above the price and scores a C+.
The company seems to be undervalued following the growth of its EPSmg or normalized earnings from 1 cent to 92 cents estimated, from 2012 to 2016. This kind of earnings growth even outpaces the implied marketAAA annual earnings growth estimate of 3.02% in the coming 7 to 10 years. That explains why the ModernGraham valuation model, which is based on the Benjamin GrahamAAAs formula, gives the bank an intrinsic value estimate above the price.
Citigroup Inc. (C) is another stock more suited to the enterprising investor. This company also seems to have been undervalued since it grew its EPSmg from -$2.31 to $4.1 estimated, from 2012 to 2016. This earnings growth significantly outpaces the implied 1.16% marketAAAs estimate of annual earnings growth in the coming 7 to 10 years. The ModernGraham valuation model therefore returns an intrinsic value estimate which is above the price. Citigroup Inc scores a B- in the ModernGraham system of grading.
So there you have two banking stocks significantly worth considering for your online trading. The ModernGraham grading system has helped realize the intrinsic value of these stocks.
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