GO
Loading...

Doug Kass: Bank Stocks Should Double in 12 Months

He first told us on Wednesday that financials could climb 10-15% in two months or so, but now Doug Kass tells us banks look like they have even more upside - a lot more upside.

And Kass is putting his money where his mouth is.

Kass, who is the president of Seabreeze partners and CNBC contributor tells us he bought the XLF at $13.

And after examining a slew of factors, he now he tells us "I'm also making a medium term call. I think banks stocks can almost doublewithin the next 12 months."

Largely, Kass thinks most investors don’t understand what’s the current weakness has a whole lot to do with forced liquidations from big money hedge funds and exaggerated moves due to high frequency trading. In other words, banks were oversold.

Also, he sees some tailwinds in the way of low interest rates which Kass calls, “a silver lining for the banking industry.” And he says franchise values are enormous relative to the current stock prices.

And despite all the headwinds such as the flat yield curve and weakness in real estate, he thinks there’s still plenty of money to be made in lending, plain and simple.

”If investors begin to focus on pre-tax income and recognize how strong and sustainable the numbers are they’re soon realize bank stocks are at absurd levels relative to their earnings power one to 3 years out.”

And Kass’s enthusiasm for stocks isn’t limited to the banking sector. He says it extends to the entire stock market.

”I said on Fast Money that the August lows will hold and I still believe they will,” he says. “I see no evidence of a double dip.”

Kass explains that a lot his ‘tells’ or gauges of real time activity are holding up just fine.

The Conference Board’s Leading Economic Indicator is up 6.2% year over year, and “usually we don’t have a recession until it’s negative.” Kass says the same holds true for retail sales. “The Johnson Redbook Index was up 4.7% - and that’s through last Friday. And the 4-week moving average on initial jobless claims is now at its lowest levels since April.”

All told, “things just aren’t as bad as the market suggests. I just don’t think we’re falling off a cliff.”


______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment, but not have it published on our Web site, send those e-mails to fastmoney@cnbc.com.


Trader disclosure: On Aug 18, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Finerman owns (AAPL); Finerman owns (BAC); Finerman owns (JPM); Terranova owns (XOM); Terranova owns (CVI); Terranova owns (CAT); Terranova owns (OXY); Terranova owns (AAPL); Terranova owns (DAR); Terranova owns (FCX); Terranova owns (CACI); Terranova owns (ARUN); Terranova owns (ORCL)’ Terranova owns (EMC); Terranova owns (NCR); Terranova owns (VMW); Terranova owns (IBM); Terranova owns (AMZN); Terranova owns (LULU); Terranova owns (LTD); Terranova owns (WFM); Terranova owns (JPM); Terranova owns (AXP); Terranova owns (FXA); Terranova owns (VRTS); Terranova owns (LQD); Najarian owns (GLD) covered calls; Najarian owns (VIX) call spreads; Stutland Owns (DBA) and short (DBA) calls; Stutland Owns (GLD) calls

For Karen Finerman
Finerman’s firm owns (AAPL)
Finerman’s firm own (BAC) leaps
Finerman’s firm owns (CAT) calls
Finerman’s firm owns (WAL)
Finerman’s firm owns (MSFT)
Finerman’s firm owns (IBM)
Finerman’s firm owns (HPQ) and (HPQ) puts
Finerman’s firm owns (JPM) stock and (JPM) leaps
Finerman's Firm Is Short (IWR)
Finerman's Firm Is Short (MDY)
Finerman's Firm Is Short (XRT)
Finerman's Firm Is Short (SPY)
Finerman's Firm Is Long S&P 500 Puts
Finerman's Firm Is Long Russell 2000 Puts

For Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of Building Materials Holdings
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (LHO)
Virtus Investment Partners Owns More Than 1% Of (NRCI)
Virtus Investment Partners Owns More Than 1% Of Sun Pharmaceutical Industries Ltd
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (RLI)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLF)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of Domino's Pizza UK & IRL PLC

For Brian Kelly
Accounts managed by Brian Kelly Capital own the Euro
Accounts managed by Brian Kelly Capital own (JJG)

For Brian Stutland
Stutland's Firm Is A Market Maker Holding Positions In VIX Futures And Options, SPX options and futures, SPY stock and options, and VXX Stock And Options

CNBC.com with wires.

Symbol
Price
 
Change
%Change
SPDR FIN SEL
---

Featured

Contact Fast Money

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET

Halftime Report