Image Source: Unsplash

Shares of State Street (STT) melted more than 16% Monday as investors yanked assets out of the financial giant and lower fees ate into revenue. Where'd all that money go? Not my pig, not my problem. 

Right now, investors are piling out of regional banks, and it's killing share prices. The SPDR S&P Regional Banking ETF (KRE) is off 27% to start the year after the 2023 banking crisis hit in mid-March 2023. This crisis has hit a lot of great banks, with solid deposit levels and muted exposure to the commercial real estate market. 

In fact, there's one bank that I believe is an absolute screaming buy at the moment. You'll think the same in a moment.

But why would I park a lot of capital and suffer the volatile whims of the market over the next nine to 12 months when I can make money now by actively trading this stock? I'm going to give you the ticker. I'm going to explain the opportunity. And I'll show you exactly the type of return I'm expecting in the next 45 days.

Cincinnati Banks Rule

If you know me, you know that I'm a big fan of Cincinnati banks. I own TFS Corporation (TFSL), a little-known community banking operator that continues to pay me a strong dividend. But there's a much more important Cincinnati bank that I need to be trading right now. That's Fifth Third Bank (FITB).

The stock's trading at a level we haven't seen since the wake of the 2020 COVID-19 crisis, and its dividend is a stunning 5% for a bank of this size. Plus, the P/E ratio is under 8. And the Fair Value of the stock, according to Guru Focus, sits at around $38.00. 

It's currently trading at around $26.69. That 50% upside is what I expect over 18 to 24 months. But the market might not cooperate with so many concerns around its rivals in the regional banking space. 

Yes, I could buy and hold it. And if other banks in the sector have terrible earnings reports, I can watch this stock pull back from $26 to $24 - and have that anger in my voice because I'm down money on paper.

Or I could buy it, hold it, and have it trade sideways for a solid six months - delivering little more than dividend payouts. That's not going to do. So, let's take a look at the situation for the next 45 days and why FITB is in my plans.

Banks are in crisis. That's not going away anytime soon. But Fifth Third has far better risk management practices. It has very little exposure to risky crypto or venture capital assets. And during its earnings report recently, it offered extraordinary transparency into its operations in March 2023. At a time that everyone is panicking about commercial real estate, Fifth Third's exposure is extremely limited.

Commercial mortgages are a paltry 9% of the total loans. And commercial construction, which remains robust in places where it is expanding, is a small part of the portfolio. That's a major risk that I can cross off my list. 

Now, let's look at the balance sheet. The story of March was about bank runs and whether these companies could access enough capital to remain solvent. Do banks have enough liquidity to weather a storm -- whether it's now or in three months?

I don't care about the rest of the sector. I am only focused on FITB. And FITB is one of the most liquid companies on the planet. Fifth Third has $206 billion in assets. Through the Fed's Bank Term Funding Program (BTFP), FITB can get funding off the back of $2.7 billion U.S. Treasuries, $12.6 billion agency residential MBS, and $29.8 billion agency commercial MBS. It's fine. It's beautiful. It's what I want to own.

But here is a stock with a fair value of about $31 (and an average price target with at least 50% upside) trading down at around $26.69. So, let me check the one last thing that would give me more confidence in this stock.

Company director Gary Heminger bought about $1.27 million in company stock at an average of $26.82 per share in the last month. That's a director with knowledge of the company's future stepping in and buying the stock with his own cash - for more than today's value. What an incredible vote of confidence.

Now, should one buy it? Sure, if you want to see dividends and a small upside over the next 45 days.

More By This Author:

People Are About To Leave A Lot Of Money On The Table
The Trouble Isn't Over For Banking: Here's What To Expect
2023 Profit Roadmap: Top Stocks To Buy (And Avoid) For The New Year