Jim Cramer: Despite Failing Stress Test, SunTrust is a Buy

SunTrust Banks may have failed the Federal Reserve’s stress tests, but “Mad Money” host Jim Cramer thinks the stock still has a lot of upside ahead.

“While the other banks have moved up colossally since the bottom, there’s still plenty of room for SunTrust to run and you want to run with it as it gets there,” he said.

Cramer thinks the kind of economic catastrophe the Fed used in its stress test isn’t going to happen. Also in SunTrust’scorner — it raised its guidance the same day it flunked the test.

While it is up 39 percent year-to-date, versus 28 percent for the banks in general, Cramer believes SunTrust might have the “most unrecognized earnings power of any of the regionals.”

In fact, he said he wouldn’t be surprised if the bank asked the Fed for permission to put through a nice-sized dividend.

“I don’t know if the bank’s stock can get back to $89, where it was five years ago ... but I think half of that is a decent target over the next 18 months, and that would give you an 81 percent gain from these levels,” Cramer said.

When this story was published, Cramer’s charitable trust owned SunTrust Banks.

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