Falling interest rates and investor flight from the stock market have, so far, worked to the advantage of regional banks and thrifts. Take GreenPoint Financial, whose GreenPoint Bank has offices throughout metropolitan New York. In the past two years, the thrift has seen its net profit margin widen to 24% from 16%, and its stock price nearly doubled.

With such runups, has the sector gotten too richly priced? Not according to bulls, who argue that although investors might be eager for a stock market rebound, it’s unlikely they’ll pile their assets into equities with abandon anytime soon. On the other hand, deposit accounts are likely to remain attractive. The same goes for real estate–provided home values don’t collapse.

“I think we’re going to see stronger-than-anticipated overall loan growth for the next two to three quarters,” says Thomas Monaco, who covers savings banks for Keefe, Bruyette & Woods, a New York-based brokerage and investment banking concern.

Low short-term interest rates are also a boon for thrifts. Savings banks thrive on the spread between what they pay on deposits versus what they earn when they lend money at higher rates.

Full story at Forbes.com

In this turbulent market, investors seem to have even lost their appetite for stocks in traditionally defensive areas such as drugs, managed care and medical devices. Health stocks in the S&P 500–while faring better than the overall index–are still down 18% for the year.

“None of these sectors is emotion-proof,” says William Meade, managing director and institutional sales specialist with RBC Capital Markets, an investment bank headquartered in Toronto.

This dip may well be an opportunity. Valuations for many health care and medical companies are low relative to history–and 79 million baby boomers aren’t getting any younger. By 2011, estimates the Centers for Medicare and Medicaid Services, health care expenditures in this country will hit $2.8 trillion, or 17% of gross domestic product.

Health stocks also come with certain risks, namely from Washington. These include the possibility of declining reimbursement levels, the push to control drug prices and the unpredictability of actions by the Food and Drug Administration. But RBC’s Meade isn’t too worried about the government: “This administration is much more company-friendly because they realize that costs do have to go up.”

Full story at Forbes.com