January was not a fun month to be an equity investor, but not all stocks were down, and a handful even showed dramatic gains. This included three financial stocks that were among the worst performing stocks in the S&P 500 in 2009.

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Marshall & Isley Corp (NYSE:MI), Zions Bancorp (Nasdaq:ZION) and Huntington Bancshares (Nasdaq:HBAN) all lost more than 50% of their value in 2009, as they saw loan portfolios go sour during the year. Yet all three had dramatic comebacks in January, as investors decided to make bets that things will get better for these banks in the new year.

Zions Bancorp was the best-performing stock in the S&P 500 for the first month of 2010, returning 48% to investors. The bank reported a loss of $176.5 million, or $1.26 per share in the fourth quarter of 2010, but investors were heartened by a sequential increase in the company's tangible common equity ratio and signs of improvement in other credit metrics.

However, despite this strong gain, Zions Bancorp remains well below its pre-recession high price of $80 per share reached early in 2007.

Marshall & Isley Corp. reported a loss in the fourth quarter of 2009 of $259.5 million, or 54 cents per share. The bank also showed a slight improvement in key credit quality metrics relative to previous quarters, convincing investors that the peak in losses might have passed.

Greg Smith, the CFO of Marshall & Isley, touted this improvement during the earnings conference call. "Early stage delinquencies, which decreased for the third consecutive quarter, continued improvement in total nonperforming loans, which decreased for the second consecutive quarter," said Smith. Marshall & Isley Corp was up 26% in January.

Huntington Bancshares rebounded strongly during January, returning 30%. Earnings were once again the catalyst along with a perception that things were "less worse" at the bank. During the conference call, Steve Steinour, the CEO, said, "sometime during 2010 we expect to return to quarterly profitability."

KeyCorp (NYSE:KEY), another bank, was up 26% in January, as it reported a smaller year-over-year loss in the fourth quarter of 2009. The bank is one of the largest regional banks with nearly 1,000 branches in 14 states.

The second best performing stock in January, and the only non-financial stock on the list, was Eastman Kodak (NYSE:EK), which was up 40% for the month. Kodak shocked the Street by reporting a GAAP profit of $430 million in the fourth quarter of 2009. During the earnings conference call, management proudly proclaimed that the company was "gaining momentum" after more than a year of losses.

The Bottom Line
Most investors probably spent the weekend recovering from January's poor stock performance, but there are a few stocks whose January performance left investors with something to celebrate. (Find out how to pick your own investments like a pro. Read How Investors Can Screen For Stock Ideas.)

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