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Bank Stocks to Watch, Avoid After Stress Tests

A few bank stocks were still worth a look after financials rallied on the Federal Reserve’s stress test results Tuesday, the “Fast Money” pros said.

Karen Finerman of Metropolitan Capital Advisors sold off some JPMorgan stock into the late rally and said it might be late to get into the game.

“Now it’s well north of book value,” she said. “As a P/E multiple, it’s still not expensive, but it’s certainly isn’t as cheap as it was.”

Drakon Capital’s Guy Adami noted that 80 million shares of JPMorgan changed hands — twice its normal daily volume.

“When you have a day like today in financials, this is what you’ve been waiting for,” he said, reiterating that the market doesn’t usually give investors much time to sell the highs.

“I would be looking to pare down positions for sure,” he said.

At least 15 big banks passed the latest stress tests, while four failed: Citigroup, Ally Financial , MetLife and SunTrust.

Brian Kelly of Shelter Harbor Capital liked Regions Financial, whose share price dipped in after-market trading.

“I think you want to be a holder of equity after recapitalization,” he said. “If they can do this — pay back the TARP and pass the stress test — this is the place you want to be.”

Citi was also a buy, Kelly said.

Kelly also liked the sector’s prospects going forward on a recession in Europe and a slowdown in Asia.

Options trader Brian Stutland sold some September $44 calls in JPMorgan and even saw potential in one of the four banks that failed.

“MetLife is even a good one to pick up, even on the sell-off today,” he said.

KBW’s Fred Cannon maintained a bullish outlook on stronger names such as JPMorgan and U.S. Bancorp, noting that the shares with the biggest recent rallies were in the weaker names.

“You have to stick with the winners after the results today,” he said.

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Trader disclosure: On March 13, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Finerman is short AAPL calls; Finerman is long JPM; Finerman is long WMT; Finerman is long TGT; Finerman is long HPQ; Finerman’s firm is long BAC; Finerman’s firm is long JPM; Finerman’s firm is long HPQ; Kelly is long GLD puts; Kelly is long SMH; Kelly is long SPY calls; Kelly is long IWM; Kelly is long KRE; Kelly is long USG; Kelly is long MHK; Kelly is long XHB; Kelly is short EWA; Kelly is short EWY; Kelly is short Aussie dollar; Kelly is short Yen; Adami is long C; Adami is long GS; Adami is long INTC; Adami is long AGU; Adami is long NUE; Adami is long BTU; Stutland is long IBM and short calls; Stutland is long GE and short calls; Stutland is long KO and short calls; Stutland is long LQD; Stutland is long DIA puts; Stutland is long SFT and short calls; Stutland is short NLY put spread; Stutland is short TLT puts; Stutland is long TIPS

Stutland is long T and short calls; Stutland is long EFR floating rate treasury ETF; Market maker holding hedged positions in VIX futures and options

For Doug Kass
Kass is long TBT common and calls

For Mary Gilbert
No disclosure

For Jens Nordvig
No disclosures

For Fred Cannon
KBW expects to receive or intends to seek compensation for investment banking services from Bank of America Corp. in the next three months. KBW currently makes a market and/or acts as a liquidity provider in Bank of America Corp. securities.

KBW expects to receive or intends to seek compensation for investment banking services from BB&T Corporation in the next three months. KBW currently makes a market and/or acts as a liquidity provider in BB&T Corporation securities.

KBW expects to receive or intends to seek compensation for investment banking services from Bank of New York Mellon in the next three months. KBW currently makes a market and/or acts as a liquidity provider in Bank of New York Mellon securities.

KBW expects to receive or intends to seek compensation for investment banking services from Citigroup in the next three months. KBW currently makes a market and/or acts as a liquidity provider in Citigroup securities.

KBW expects to receive or intends to seek compensation for investment banking services from Fifth Third Bancorp in the next three months. KBW has received compensation for investment banking services from Fifth Third Bancorp in the past 12 months.

KBW currently makes a market and/or acts as a liquidity provider in Fifth Third Bancorp securities. Fifth Third Bancorp currently is, or was during the 12-month period preceding the date of distribution of this report, a client of KBW.

KBW expects to receive or intends to seek compensation for investment banking services from Goldman Sachs Group, Inc. in the next three months. KBW has received compensation for investment banking services from Goldman Sachs Group, Inc. in the past 12 months. KBW currently makes a market and/or acts as a liquidity provider in Goldman Sachs Group, Inc. securities. Goldman Sachs Group, Inc. currently is, or was during the 12-month period preceding the date of distribution of this report, a client of KBW.

KBW expects to receive or intends to seek compensation for investment banking services from JPMorgan Chase & Co in the next three months. KBW currently makes a market and/or acts as a liquidity provider in JPMorgan Chase & Co securities.

KBW expects to receive or intends to seek compensation for investment banking services from MetLife in the next three months. KBW currently makes a market and/or acts as a liquidity provider in MetLife securities.

KBW expects to receive or intends to seek compensation for investment banking services from Morgan Stanley in the next three months. KBW currently makes a market and/or acts as a liquidity provider in Morgan Stanley securities.

KBW expects to receive or intends to seek compensation for investment banking services from PNC Financial Services Group in the next three months. KBW currently makes a market and/or acts as a liquidity provider in PNC Financial Services Group securities.

KBW expects to receive or intends to seek compensation for investment banking services from U.S. Bancorp in the next three months. KBW currently makes a market and/or acts as a liquidity provider in U.S. Bancorp securities.

KBW expects to receive or intends to seek compensation for investment banking services from Wells Fargo & Company in the next three months. KBW currently makes a market and/or acts as a liquidity provider in Wells Fargo & Company securities.

For Scott Nations
Nations is long BAC

Nations is long C

For Mike Kirby
No disclosures

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