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Leigh Baldwin & Co.

112 Albany Street, Cazenovia, NY 13035 | Phone: (315) 655-2964 Toll Free: 1-800-659-8044

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Stock of the Week

Huntington Bancshares

March 12th 2010 Huntington Bancshares
Nasdaq Symbol: HBAN
Industry: Regional bank
Price as of 3/12: $5.47


The averages are pushing back toward the highs for the year with recent strength in the techs like Apple and Google. Also the insurance stocks and financials are starting to break out. Metlife which we have featured twice in the last year finally received approval to buy a division of AIG. Metlife and their earnings estimates keep pushing higher. Within the financial, the big banks are performing well. Citigroup, Bank of America, Wells Fargo, Goldman Sachs, and JP Morgan are all acting much better. However, this week we feature a regional bank with heavy insider buying that is starting to perk up. The stock of the week is Huntington Bancshares. Huntington has struggled through the financial crisis. Based in one of the hardest hit areas of the U.S., central Ohio, Huntington is the largest hometown bank with 68 branches and $10.2 billion in deposits and $52 billion in total assets. Part of the recent rally in Huntington is due to rumors of a takeover, but management is bullish about their future. Huntington is committing $4 billion in loans to small businesses over the next three years in Ohio, Michigan, West Virginia, Pennsylvania, Indiana, and Kentucky. They are also expanding offices and adding jobs in Michigan and Pennsylvania. Huntington Bancshare is not a conservative stock. The company is still losing money, but the fundamentals are improving and heavy insider buying makes Huntington a good long term play.
Back in January, Huntington reported dismal fourth quarter results. The company reported a loss of $36 million, or 56 cents a share. Analysts on average were expecting the bank to lose 27 cents a share. Huntington dramatically raised their reserves for loan losses as many banks did in the fourth quarter to make their earnings look better going forward. Management at Huntington expects the absolute level of the credit loss allowance to decline going through 2010, with charge offs peaking as well. The credit costs will remain above normalized ranges, but Huntington believes they will moderate, given their actions taken in 2009. Huntington stated they have sufficient reserves to continue resolution of credit issues. And if the economy stabilizes at or near current levels, then Huntington will return to profitability some time during 2010.
As mentioned, Huntington is still losing money, so the stock is not a conservative investment. Huntington is expected to be back in the black by the end of the year so the PE is still very high. The book value makes the stock attractive, trading for a little over 1 times book value of $5.09. The stock also trades for 1.4 times sales. The fact that there are plenty of insiders buying and the fact the company is expanding operations once again are positive signs for Huntington Bancshare and their shareholders.