Financial stocks have taken a beating -- but have they reached bottom? Jon Hilsenrath, money and investing news editor at The Wall Street Journal and a CNBC contributor, pointed to five bank stocks that savvy investors need to watch closely this year.
Hilsenrath noted that lender Countrywide Financial, slammed by the subprime mortgage mess, is trading at a third of book value. "If they survive this year...that's a sign the rest of [the industry] will too," he said.
Bond insurer MBIA faces an uphill climb, after Berkshire Hathaway chief Warren Buffett created a rival startup, Berkshire Hathaway Assurance. Hilsenrath said the billionaire's competition may be a good omen for the bond business as a whole -- but may be lethal to "existing companies."
Under new leadership, Citigroup and Merrill Lynch may see better days in 2008, as the banks' departed "CEOs were at the heart of their problems," he said.
And student lender SLM -- better known as Sallie Mae -- is an indicator of a whole other subsector of banking, he notes. Trading at "less than two times book value," it suffers "all kinds of issues" -- not the least of which is a rival receiving a big investment from Goldman Sachs.