In the Cramer blog post, “How to Survive the Banking Meltdown”, which bank ranked “Almost as Bad as the Worst”?
Almost as Bad as the Worst: National City (NCC), Washington Mutual (WM) and First Horizon (FHN)
FIRST HORIZON NATL CORP
FHN
7.23 1.34 +22.75%
NYSE
Picks & Pans: In “Options Bubble on Financial Trouble,” whose “implied volatility” shot up 101% Monday?
“Keep an eye on Washington Mutual,” sha said. “When I spoke to your producers at about 10:30 a.m. this morning, its implied volatility was up 37 percent. When I left the office to come to the studio here, it was up 101 percent, and again we saw traders selling volatility in the front month.”
In his Friday “Game Plan,” Cramer said banks may bottom soon. But he warned of possible “catches,” including:
The catch here, and there always is a catch, is that if HOV and TOL report poor numbers and the U.S. has lost more jobs, Cramer’s predicting next week would be horrible for the financials. American International Group (AIG - Annual Report), Washington Mutual (WM) Wachovia (WB - Annual Report) and Bank of America (BAC) could sink to multiyear lows.
None of the stocks fare especially well in the models I use. HOV doesn’t even make it past the screens, and Toll Brothers scores among the worst for earnings momentum and return potential.
Bank of America scores poorly for earnings quality, earnings momentum and price momentum. The same applies for Wachovia, which also ranks low for free cash flow. Washington Mutual, by contrast, has a high free cash flow ranking but is also among the worst ranked for return potential.
AIG is the only name on the list that is not a net negative in my models. Its poor scores for earnings momentum and price momentum are offset by high marks for earnings quality and free cash flow.
Disclosure: At time of publication, William Trent has no financial position in the companies mentioned in this article.
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