Give These 5 Sectors a Second Chance

Sector #4: Banks

Is there another sector currently so loathed? I don’t think so. America is scorning the bankers and Wall Street fat cats that supposedly got us into this mess.

Before this credit crisis, nobody cared that firms were highly levered and operating a secret financial market using derivative securities. Credit-default swaps and mortgage derivatives put huge bonuses in the pockets of the bankers, and now they’re coming to the government asking for a trillion-dollar bailout. Man, talk about a tough group to love.

But we cannot have a strong economy without a strong financial system. The new administration announced its plans to help banks heal. Under these plans, common equity appears to be preserved. That line in the sand is good enough for me.

A handful of banks are going to survive this mess. Those names include Wells Fargo (WFC), Bank of America (BAC) and Citigroup (C).

If you absolutely cannot support this industry, take a shot at some regional names like TCF Financial (TCB), Frontier Financial (FTBK) or SunTrust Banks (STI).

Next: Sector #5 – Oil Refiners