Benj Gallander Bank of America BAC-N COMMENT May 22, 2018

Financial sector offers great promise, though it's reacted to current markets by pricing in a potential recession. Slower economic growth would not be good for banks. Absent a recession, with consumer confidence returning and unleashing M&A, the sector provides a good opportunity.

A less expensive choice further down the food chain from the likes of JPM.

Still positive on financial sector and on money centre banks in particular. Yield curve is starting to normalize, a positive for banks. 

He'd rather an investor look at JPM. JPM has a rock-solid balance sheet, and probably the best technology platform and management.

Likes TD a lot. Very undervalued at 10x PE. Potential for multiple to rerate in medium term. More upside as it distances itself from the overhang of regulatory infractions. All that should give you a better total return. He'd pick TD.

For BAC, even with deregulation in US, the big banks are already so large, it's hard to imagine they'd be allowed to get even bigger.

Stock's fallen a fair bit, which was unexpected given the numbers reported last week. Lots of capital; lots of room to increase dividend and buy back shares. Environment is tough with potential recession. Trading at 1x book, 10x PE. Some of the best businesses in the world -- asset management, financial services, capital markets (one of the top 4 players globally), retail, credit cards. Yield is 2.74%.

High quality. Globalization is starting to move in a different direction, so this option provides a more domestic focus.

The US banks are cheap in valuation, and benefit from an M&A cycle that will come.

Keep a full weighting in the financial sector, which is primed for doing well in the next leg of the market. The sector is not expensive and has policy tailwinds. Banks are best capitalized in their history. It's a red herring--don't be scared off by Trump's Big, Beautiful Bill (and the fear of higher taxes).

Trades at 1.25x book value and almost a 3% dividend yield. Are growing revenues and increasing market share. Will benefit from IPOs and M&A. Wealth management generates recurring revenues. They keep costs low.

It reports Wednesday. Trades at only 13x PE, cheap because of the relentless selling by Berkshire Hathaway. But when that selling stops, the PE will be much higher. He expects a good quarter.