Bank of America (BAC)

(A Top Pick Apr 21/17, Up 32.89%) They were big beneficiaries of anticipated Trump tax cuts. He models 23% earnings per share growth. It is one of his favorites amongst the US banks.

US banks have positive outlook now. The curve flattering now might be not the best for them. A US government that us pro-growth favors them.

BAC vs. Wells Fargo? He's long the U.S. banks more than Canadian ones, given better economic growth down there. BAC is at the top of the U.S. banks for earnings growth. Prefers BAC over Wells. Once Wells overcomes the recent customer service controversy, it'll take time for the bank to recover.

After recovering from 2008, BAC should see more upside coming because it's closely tied
to the U.S. economy and the rising yield curve. A good buy.

He prefers US banks to Canadian banks, given where they are in the cycle. He owned this back in 2016 and it has done very well but the drivers of the growth that were expected in 2016 have now played their role. He doesn’t see a good risk-adjusted return in the near future for this stock.

Bank of America or Wells Fargo? Both are well-diversified and have interest rate sensitivity. BAC has better capital markets exposure, which he likes. Wells Fargo is in the doghouse with leadership, namely with regulatory problems. This hamstrings WF management. This is a big knock against them. Definitely prefers BAC.

Rising interest rates will improve margins and revenues, but also loan growth will increase more than the street expects. (Analysts' target of $34.46)

He likes the interest rate spreads and recommended it when Trump came to office. This quarter he expects a big dividend increase. They are only paying out about 20% of earnings. They have a very conservative balance sheet he believes. The political trend is moving towards helping banks get bigger. Yield 1.5%. (Analysts’ price target is $34.46 )

Likes the U.S. financials and particularly banks. He owns others instead, like JP Morgan and Citibank. There's lots of capital returning to these banks within a weakened U.S. regulatory environment. Strong management.

They will raise their dividend from around 1.5% to 2% in a year, as the payour ratio nearly doubles to 30%, and they'll buy back their shares. They have lots of capital. Headwinds in the past decade in the U.S. have turned into tailwinds. The U.S. economy is growing strongly. BAC will trade at a couple times book value. (Analysts’ target: $34.46)

All American financials benefited from the tax reform and rising interest rates. She prefers JPMorgan Chase & Co (JPM-N).

(A Top Pick April 19/17 Up 43%). He would buy it again today at these prices and trades only 1.2 times book value. The book value is growing at 15% per year. They also benefit from higher interest rates. You could hold this for many years.

This is his favorite U.S. bank. They’ve cut costs well, are a big benefactor of US tax cuts and are big in consumer banking and commercial. The US financial sector as a whole is well-positioned. BAC issued a large number of shares in 2009 during the financial crisis and are finally in a position to be buying them back. The stock sells at 1.2x book value while competitors sell for 1.8 or 1.9x.

He paid $6 and is looking to sell at $38. He believes the dividend will rise further and the stock will rise with them.

US banks are still really cheap. It is going to benefit from tax cuts and less regulation. Really nice growth numbers.