Right now, the markets are under extreme pressure. 

Energy stocks broke down first this afternoon. Now, I’m looking for biotech to sell… and then… the large banks. It could be a very ugly week for Bank of America (BAC), JPMorgan Chase (JPM), and Citigroup (C).

I prefer another area in the financial sector – one with a goldmine of potential.

So if you’re not taking advantage of a 35-year trend that has consistently made investors money, I don’t know what to tell you. It’s simple. It’s obvious. It’s one of the best public stock strategies that no one is watching.

If you’re worried about the market over the next two weeks, you need to put your money here instead.

A Diamond in the Rough

The Federal Reserve raised interest rates four times in 2022 and several additional times in 2023. 

This is part of an aggressive push toward the “normalization” of interest rates and provides a boost to banks, whose bread-and-butter business is lending. Last year, MarketWatch offered an article for investors to cash in on this story. It didn’t really work out the way that the company intended.

The title: “These 14 bank stocks are in the best position to benefit from rising interest rates.”

Fourteen? Fourteen! 

Don’t even get me started on trying to find where to get started on 14 banks.

The list does include a few names of banks that I do like. 

New York Community Bank (NYCB), Huntington Bancshares (HBAN), and First Republic Bank (FRC). But the author is writing about several different figures that don’t matter when you’re looking to buy and hold a bank. 

There’s the speculation about Forward Price-to-Earnings, which is speculation on the future. 

There are various earnings per share estimates – again, speculation. 

There’s very little analysis on whether any of these stocks are… well… cheap. 

In the world of banking, there’s only one metric you need to use to look for cheap banks.

It’s called “Price to Tangible Book Value” (P/TBV).

This is the stock price compared to the company’s liquidation value. 

Imagine that a bank sits across the street with $1 million in the vault. The bank owns the land and has few costs. For practical purposes, let’s just say that the liquidation value of the bank is $1 million. 

But for some reason, the bank’s market capitalization on the public market is $800,000.

That would be a price of $800,000 on a tangible book value of $1 million.

Or 0.8.

Banks might trade under their tangible book value for many reasons. They might be illiquid in terms of trading. They might face regulatory hurdles. Finally, they might just be banks that no one has ever heard of – and the herd prefers to own JPMorgan Chase (JPM). 

Well, I want to stress that there is ample opportunity in these cheap banks with low price-to-tangible book values. Here’s why.

M&A Continues 

Since 1987, community banks have consolidated at a 3% to 5% annual average rate. Yes, there are some outlier years, but the trend remains. Back in the 1980s, there were 15,000 banks in the United States.

 Today, there are under 4,500. 

 But don’t mistake this consolidation as a sign of slowing down. Remember, by comparison, Canada has five banks. The U.S. number could always fall to that level in the decades ahead. 

 Look at community banks that are trading under a price-to-tangible book value of under 1. 

 And I just added one of the best in my Tactical Wealth Investor. In January, I crushed the S&P 500, and I’m now tapping into a New-Jersey based community bank that trades for about 79 cents on the dollar. 

This company operates in the increasingly popular digital banking space and has incredible upside should it become a takeover candidate. 

Best of all, there’s a very small correlation between these banks and the S&P 500. 

So even if the market takes a bath over the next week due to the Fed or the jobs report, this stock has a lot of protection against any downside. Today, shares trade for under $12. But if this company finds a suitor, it could find a buyout in the $20 to $22 range. 

Check out my letter right here and get in on the Charter price at a ridiculously low $39 per month. 

Enjoy your day,

Garrett Baldwin

P.S. Please let me know if you have any feedback, questions about today’s issue or anything else. Just email us at hubfeedback@wealthpress.com.

*This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk. 

Market Momentum is Green

Momentum is still green despite the Fed news today, but we could see a very violent shift in expectations over the next 24 to 48 hours. What will the market do? We’ll find out. If there is a change, you’ll be among the first to know. 

The FBI notes that bank robberies have hit their lowest levels in 50 years. 

Gone are the days of Bonnie and Clyde, Butch Cassidy, and other bank bandits.

It’s hardly surprising given the trends in finance. 

In fact, the lack of bank robberies tells us exactly what to make of the industry in the years ahead. More important, we know that trading cheap banks is a great way to make money in an uncertain market. 

Let’s look at three bank stocks that are so cheap… you’re almost robbing them.

Banking Bandits Go Bye Bye

We might watch Hollywood movies and find ourselves entranced by the pulse-pounding scenes of bank stickups. Think The Dark Knight, Point Break, The Town, Heat, Dog Day Afternoon, and the incredibly underrated Inside Man. 

But bank robberies today don’t typically involve teams of robbers brandishing weapons. 

In fact, about 85% of bank robberies happen, rather quietly, at the bank teller’s window. 

Someone walks up (usually without ever showing a weapon) and demands cash. It’s very rare that a bank is robbed after hours. And the average thief ends up walking with about $4,200. That payday is down from an average of $5,200 (or $38,000 in today’s dollars) from the 1960s. 

That seems like a lot of money… until you realize that the average credit card thief can effectively steal $60,000 in less time than a physical bank robbery. 

Today, banks are carrying less cash than ever, as we move toward a more cashless society. The bulk of cash withdrawn is done so through ATMs. So… banks have less cash at their windows. 

If you make a larger withdrawal today, tellers typically have to walk back into another room to authorize it. And it can be a rather lengthy process (especially if you pull more than $10,000 in cash). 

Now, here’s an even crazier statistic: The reward for most robbers doesn’t match the risk. Anyone who injures a person while robbing a bank will get an additional 25 years added to their sentence, according to The Conversation. 

But the average person who stole $60,000 in credit card fraud received… an average of two years prison time, according to a 2016 report from The United States Sentencing Commission.

Incentives… and disincentives… matter. The number of bank robberies has plunged over the last 30 years. In 1991, bank robberies peaked at 9,388 events. By 2021, the figure fell to 1,724. 

The other thing driving this reduction? Banking consolidation and the number of branches open around the United States. The number of banking branches from 2009 to 2020 declined by 15.2%. 

I fully expect that trend to continue in the years ahead.

Banking Consolidation Disrupt the Bandits

The U.S. banking system has experienced dramatic consolidation over the last 35 years. In 1987, there were more than 15,000 U.S. banks. Today, there are roughly 4,500.

The banks didn’t go out of business. They weren’t robbed of all their capital. 

The trend is consolidation – bigger banks buying smaller banks. And it’s been a big money maker for investors who buy cheap banks and ride the consolidation wave. 

Want to know how to “rob” banks? Buy the ones trading for less than a Tangible Book Value of 1. These banks are trading for less than the sum of their parts. 

Think of it this way…

A bank has $10 million in its vaults. But for some reason, the stock is trading for 60 cents on the dollar. 

This is way more common than it seems. In fact, 46 banks trade on U.S. exchanges for less than their tangible book value. 

All you do is buy a basket of them… and wait. 

Three names trading for 65 cents on the dollar or less: 

• OptimumBank Holdings (OPHC – 0.56x)
• Republic First Bancorp (FRBK – 0.65x)
• First Internet Bancorp (INBK – 0.65x). 

Buy and hold these names. It almost feels like you’re stealing.

To your wealth,


Garrett Baldwin

P.S. Please let me know if you have any feedback, questions about today’s issue or anything else. Just email us at hubfeedback@wealthpress.com.

*This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk. 

Market Momentum is Green

Momentum remains positive, but the market showed a surprising top pattern last week after the S&P 500 pushed against its 200-day moving average. Markets appear to be waiting for Microsoft’s earnings, an update on GDP, and Friday’s PCE measurement. Meanwhile, our Tactical Wealth Investor continues to show the best combination of value and income in this tricky trading environment. Our most recent pick has increased more than 10% since January 1. And we have a brand-new pick emerging during the first week of February.