#7 - Comerica (NYSE:CMA)
If the adage “everything’s bigger in Texas” is true, then Comerica, Inc. (NYSE: CMA) should be in good shape as the Dallas-based company is positioned in one of the nation’s fastest-growing markets. Notably, Caterpillar Inc. (NYSE: CAT) is moving its headquarters to this area.
And Dallas isn’t the only feather in Comerica’s bank. The bank is located in 14 of the 15 largest metropolitan areas and in nine out of the 10 fastest-growing metropolitan areas.
Comerica is the nation’s 18th largest bank, with $71.4 billion in deposits and approximately $54 billion in loans as of February 2023. It is a mid-cap bank with a market cap of $5.92 billion.
As of December 2022, the bank’s Common Equity Tier 1 ratio was 10.02%. This was up from 9.93% in the prior quarter but slightly down from the 10.13% it recorded in the same quarter the prior year. It is also slightly below the peer average of 10.17.
About Comerica
Comerica Incorporated, through its subsidiaries, provides various financial products and services. The company operates through Commercial Bank, Retail Bank, Wealth Management, and Finance segments. The Commercial Bank segment offers various products and services, including commercial loans and lines of credit, deposits, cash management, payment solutions, card services, capital market products, international trade finance, letters of credit, foreign exchange management services, and loan syndication services for small and middle market businesses, multinational corporations, and governmental entities.
Read More - Current Price
- $61.16
- Consensus Rating
- Hold
- Ratings Breakdown
- 9 Buy Ratings, 11 Hold Ratings, 3 Sell Ratings.
- Consensus Price Target
- $67.68 (10.7% Upside)
Bank stocks are generally among the safest stocks you can own. However, in 2007 and again in 2023, investors were reminded that they still present risk. In a low-interest rate environment, that may not be a risk worth taking. In a “higher for longer" rate environment, bank stocks generally perform well, and the risk calculation changes in favor of opportunistic investors.
If picking individual stocks is not your style, you can get exposure to regional banks in a variety of exchange-traded funds (ETFs) that specialize in regional banks. One option is the SPDR S&P Regional Banking ETF (NYSEARCA: KRE). ETFs allow you to get exposure to an entire sector, and the fund managers go to great lengths to ensure their returns keep pace with the market index they are tracking.
Another advantage of investing in regional ETFs is that you can count on the fund managers to have performed their due diligence. Most banks have a predictable and regulated business model. But there still could be nuances that conceal risks that retail investors may not pick up on. Investing in an ETF can smooth out that risk.
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