Bank of America (BAC)

Over the long term it is a great company. The entire group of larger cap banks in the US are very well positioned. They are as well capitalized as they have ever been. They are benefiting from a strong US economy and housing market. Loan losses have been very modest as housing prices continue to rise. They trade at a pretty low PE multiple. He thinks they will continue to do well.

(A Top Pick May 1/17 - Up 26%.) He thinks it is a great story. Continue to bring down costs. Continue to see growth. Trading around book value. Still a lot of upside.

BAC vs Citibank: He feels BAC will go much higher. He likes it for its Merill Lynch investment banking and portfolio management side. There's nothing wrong with Citibank and it too will do better. He would add to his BAC position. He think U.S. banks in general will have another run.

Well-run. This (and Morgan Stanley) were the most damaged banks in 2008, so they've had to grow their valuations since then. Now, they trade at a discount to book value. They're profitable, though struggling now with loan growth.

The last earnings report was excellent. The stock now yields 1.6%. He owns a lot of this personally. His model price is $32.45, which is a 9% upside. He expects it to go to $32.70. If the market moves higher from here, it will be led by the too-big-to-fail banks. (Analysts’ price target is $34.34)

It has a discounted valuation, in his opinion, despite a rising dividend and excellent capitalization. He thinks the US banking sector is the strongest in this space and this is the most focused in US business of any of the biggest banks. They will be impacted by the flattening of the yield curve, as near term rates have risen. He would stay away until there is more certainty on trade war issues and watch the trend in the yield curve.

He loves U.S. banks. This is quite undervalued. They may be over-earning now. Nobody is defaulting on their mortage and the economy is humming along. Well-run company.

He likes U.S. banks, his largest weighting. But the yield is curve is flattening. He's holding tight to these stocks. Expect more share buybacks and dividend increases. It pays a 1.7% yield and this will rise. Be patient with this.

Worth buying a few hundred September calls? He likes this bank. They passed their stress test. He needs to see movement on the 10-year rates. If there's no bump, then BAC will have a hard time moving up--a serious headwind. The 10-year should be higher now. If we get an inverted yield curve, that leads to a recession within a year.

The US banks had had a tremendous run. He is not surprised they pulled back a little bit. The shape of the interest curve is flattening and is not favoring the banks much. He just added to his portfolios. One of the few sectors he is long in the US in any significant way.

This stock needs to be evaluated in the broader outlook of the macro market drivers. He thinks this is one of the better national banks, because of the balance between retail and merchant banking. Goldman Sachs lacks the retail side, so their earnings are lumpy, for example. He expects a dividend increase. He has stayed away in general, favoring to cherry pick the regional banks in niche markets.

U.S. banks have been going sideways since February. His model suggests a 15% upside for B of A from this price. The bank pays only 18% of their earnings this year. The stress test will probably prompt positive announcements about its dividends. (Analysts’ price target is $34.48)

Money is being reallocated out of the financials after the run a year ago. This is because of the flattening yield curve. After the trade war threats blow over it will help equity markets, you will see growing dividends out of BAC-N and the stock will break $30. This is a nice holding for the next 10 years.

He likes U.S. financials, but are not testing their 100-week moving averages, so they're coming into great support levels now. He likes Bank of America.

He likes U.S. financials, but are not testing their 100-week moving averages, so they're coming into great support levels now. He likes Bank of America.