However hard the market slams a stock, there's always the chance it'll come bouncing right back. We'll consult our Motley Fool CAPS community to find shares on the rebound, examining one specific sector of the economy in search of companies with rising CAPS ratings.    

There are 257 stocks listed under banking in the CAPS' screener, but we've found more than a few that are well respected with four- and five-star ratings. Those accolades mean our 165,000 CAPS members are confident that these stocks will beat the market in the months ahead, but let's see what members are saying about the ones below:


CAPS Rating Today

Recent Price

52-Week Price Change


5-Year Growth Rate

Allied Irish Banks (NYSE: AIB)





Lloyds Banking Group (NYSE: LYG)





US Bancorp (NYSE: USB)





Source: Motley Fool CAPS; Yahoo! Finance.

Until the market hit the panic button, the broad market averages had staged a pretty bold recovery -- but the market is still up 17% over the past year. Surprisingly, CAPS bank stocks have fared only slightly worse, with average returns around 13% from a year ago. Of course, those returns were helped by Regions Financial (NYSE: RF) nearly doubling in value and Fifth Third Bancorp (Nasdaq: FITB) rising 84% over the past year.

So let's take a closer look at why investors think that some of these other companies won't be jumping from the frying pan into the fire now that the market has fallen from its lofty heights.

Some spring in its step
Despite being from one of the so-called PIIGS -- that's Portugal, Ireland, Italy, Greece, and Spain -- and having to surrender a portion of its ownership to the government in return for getting bailed out, Allied Irish Banks is still seen as having some inherent value well above its current price.

It took awhile, but Europe's $1 trillion bailout plan of countries (like Greece) with a pile of debt offered at least some hope that the other troubled economies will get the assistance they need. Those financial institutions with the greatest exposure to the economies with the worst finances may get benefits as well. Allied Irish Banks may appreciate with the stabilization underway; so should ING Group, which has significant exposure to the EU, and Madrid-based Banco Santander (NYSE: STD), which derived 40% of its 2009 revenues from continental Europe.

CAPS member McNamara04 is looking for Allied Irish Banks to gain greater control of its finances through asset sales.

There will be some short term pain as [Allied Irish Banks] sells assets to get it's debt under control and hopefully minimize State ownership. [Allied Irish Banks] has some good assets in the US and Poland, the question is whether they can raise the required 7B Euro by the end of this year. [Allied Irish Banks] is an important component of the Irish economy and when Ireland recovers, so too will [Allied Irish Banks].

International markets are smokin'
They might not be PIIGS, but British banks Lloyds Banking Group and Royal Bank of Scotland (NYSE: RBS) face the same sort of troubles their continental peers do. Because they're also partially nationalized financial institutions, they could suffer from the foibles of European economies.

For example, two things sent ripples across European banking institutions today. One was Hungary's revelation that its national finances are much worse than previously hinted at -- "skeletons were continuously falling out of the closet," according to the prime minister. Also, French bank Societe Generale was rocked by concerns over its derivatives operations.

But Skyshark29 thinks these jitters will subside, leaving Lloyds in a better position to rally.

Overall world market recovery pick. Over the next three years as the market continues to recover and then moves toward growth again, Lloyd's is sure to regain previous strength and status. Fears of Greece and the Euro will subside eventually, and as the bulls return, [Lloyds Banking] will be among one of the favorites, IMO.

US Bancorp, on the other hand, doesn't have to worry about exposure to sovereign debt woes, and its recent earnings report showed a strong 11% increase over the year-ago period as both interest income and fee income rose. Its share price is also up by about 31% over the past year -- quite an impressive feat.

Yet investors still need to be cautious because of the company's exposure to the U.S. commercial real estate market: Non-performing assets rose 47% from last year as stresses in the building markets and a rising tide of foreclosures took its toll. Commercial vacancy rates hit 16.9% in the first quarter and are expected to climb to 17.6% by next year before easing.

That might be why highly rated CAPS All-Star cos267 thinks it will be some time yet before US Bancorp fully recovers.

this is a good bank; however it is going to be sometime before this bank gets back on its feet. with bad investments and the new regulation coming, it is going to be awhile before we see some real upswing.

The ball's in your court
There are many factors that go into whether a stock is a buy or a sell, so it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Head over to CAPS today and share your thoughts with other investors on whether you think these stocks are ready to bound higher.

Try any of our Foolish newsletter services today, free for 30 days.

Fool contributor Rich Duprey doesn't have a financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.