Bank of America (BAC)

His initial sell target on this is $38, so thinks it still has quite a way to go. Thinks it will keep going up and their bottom line will keep on improving for the next little while.

It trades at a 25% discount to WFC-N and JPM-N and is less internationally exposed. BAC-N are returning capital hand over fist. Regulations are continuing to come down. The FED feels capital requirements have hit a max. Regulatory reform is a big positive.

Sell Toronto Dominion (TD-T) and buy Bank of America (BAC-N)? When you own a name like Toronto Dominion, you are generally getting a steadier name, and you are probably not getting levered up as to what is happening in the US with rising interest rates, etc. TD also gives you a better dividend of 3.3%, versus about 1.6% from Bank of America.

(A Top Pick Jan 19/17. Up 32%.) Feels there is still more to come. 2 things will help. He is pretty sure there will be another rate increase, and if tax reform comes, their earnings are going to get a little bounce. The stock is still fairly cheap.

He likes this because of rising interest rates, less regulatory interference and the stock is cheap. Even in a bear market, he doesn’t think this is going to get hurt badly. Dividend yield of 1.7%. (Analysts’ price target is $29.)

It is up a bit. If you were looking for a trade over the next couple of weeks, it would probably work out to get out of this.

$32 is what he sees as an upside. There are some really good drivers for them because they are the money centres and have a lot of levers to pull. (Analysts’ price target is $29.)

Prefers US banks over Canadian banks, as he expects there will be a little more loan growth, especially if you consider that US households have a lot less than Canadian households. This bank has had a fantastic run. It is amongst the large cap banks, so has the most exposure to rising US interest rates.

(A Top Pick May 5/17. Up 13%.) The story on this is higher interest rates in the US. Under the Trump administration, we might see a roll back of the Dodd Franks punitive legislation. The balance sheet is very strong. At some point we are going to see multiple raises of the dividend, but are not quite there yet. This is still a Buy.

(A Top Pick Dec 13/16. Up 20%.) We are still very early in a revaluation of US banks. Trading at 1X Book. BV is growing, so there could be an expansion of the multiple of BV. Tax reform would be good for this bank. 85% of its revenues come from the US.

When in a strong market and there is clear leadership, there is no reason to jump from one boxcar to another. If the things causing structural change are continuing to strengthen, that is a good reason to stay in position. There are 4 key things that are going to move this higher. 1.) Rising interest rates. 2.) Deregulation. 3.) Cost cutting. (Have cut $10 billion of expenses since 2010.) 4.) Economic growth is accelerating, which helps grow business. Raised their dividend 60% last year, and it is going to increase again this year. Financials can be revalued, multiples can expand and earnings can get better, for 5 to 7 years. Dividend yield of 1.8%. (Analysts’ price target is $29.)

(A Top Pick Nov 30/16. Up 27%.) Banks are going to do well in this environment, because they are set up for it. They’ve had 8-9 years to repair their balance sheets. The economy is reasonably good. Feels there is a longer runway for the banks, because before the yield curve turns over, it will get steeper.

This entire space has been doing well and there is more opportunity to continue grinding higher. They have a lot of company specific issues, with a lot around capital returns and expense controls. The industry has been kind of stuck at this level of operating expenses, so there are a lot of questions on being able to reduce the cost base through technology. It will be interesting to see how this plays out. If they can get some good expense leverage, plus capital return, there is a lot of capital on their balance sheets with their tier 1 ratios that can come back. It seems that, with this administration, they are going to accommodate that. Thinks the group continues to grind higher.

This is a bank she favours. It has had a lot of improvements on their metrics. They have strong growth in credit cards and investment banking. She expects only 7% earnings growth for next year but it is one of her favourites.

A great story. Trading at 12X earnings. Thinks Book is going to be around 26 this year, a little bit above BV. The issue is very simple. They've cut costs, gotten rid of businesses in parts of the world they didn't want to be in, and are between #1 and #4 in investment banking. Trading at 1.1X Book, and feels it should trade at 1.5X. Expects a massive amount of cost cutting in the banks over the next 5-10 years, because technology is really catching up to the banking industry. Dividend yield of 1.7%. (Analysts' price target is $29.)