Bank of America (BAC)

(A Top Pick Nov 16/15. Down 4.12%.) This hasn’t done much, but is sort of typical as all US financials haven’t gone anywhere, which is why he sold his position. There has been a constant deferral of monetary tightening. There is nothing wrong with it, but as an investor do you continue holding on and on when nothing is happening?

(Market Call Minute.) Really likes the investment dealers as a group, and he likes this bank’s numbers.

American banking is not expensive, and the banks are quite reasonably priced. Also, they still haven’t raised their dividends as much as they could. There are likely good times ahead. If interest rates rise, once in 2016 and 2 or 3 times in 2017, this allows banks to increase their net interest rate margins. Expects this will be net positive for the banking industry. Not his 1^st choice, but not a bad choice.

She owns another US bank (WFC-N). You want to buy US banks because of rising interest rates and an improving economy. You could buy BAC-N here and she thinks it will do relatively well over the next year. We should start seeing improvement in the yield.

He likes this quite a bit. The stock recently broke out over one of his key technical breakpoints, and looks to have a pretty good count. The minimum count he would see would be something in the order of 19 ($?), but FMV actually shows quite a bit higher. The issue is what is going to happen to interest rates. If rates are going to go up, this will benefit all the US banks. (This was almost one of his Top Picks today.)

Net interest margins have been collapsing as rates have fallen, and as a result, the earnings have just come in. They have other lines of business such as asset management, but they are extremely competitive areas. This has been trading cheaply for a long time now, a little bit above BV. He likes the name, but you are going to have to be very patient. Rates are going to have to go up and he thinks you will be rewarded. If you can put a 3-5 year time horizon on this investment, you will do well.

You are safe with this. The share price really hasn’t done much over the last 52 weeks, and year-to-date is down about 8%-10%. There is nothing wrong with the entry-level at this point. Trading at around 12X, but you are getting a lousy yield of around 2%. Also, if you are Canadian, you don’t get the dividend tax credit. In the short term there might be a bit of an upside. He would prefer some of the US regional banks.

(A Top Pick Sept 8/15. Down 2.05%.) He still likes the US banks, but his preference now would be J.P. Morgan (JPM-N), Wells Fargo (WFC-N) and some of the others. The issue with US banks has been sentiment related. The money centred banks in the US are exceptionally well capitalized. Because US banks are so well capitalized, they are going to take market share away European counterparts, where the risk rated asset calculations are probably a lot less conservative than they are in the US.

The sector has been so regulated recently that it will not be affected by a new president. The sector has reduced risks now and the valuations should be higher. This one is trading at a discount to its tangible book value. It is worth holding onto. The currency risk is keeping him out of it.

A cheap stock by any valuation metric you want to use. What has hurt the banking industry short term in the US this year is that the federal reserve increased rates in December and everybody thought the yield curve would steepen. The yield curve actually flattened and really hurt the banks. There are 2 things this bank will definitely do; ROEs will slowly increase and dividends won’t increase as much as people think.

Bond yields are likely to slowly work higher, and financials are the most positively impacted by a rise in yields. This one looks really attractive and he considered making it a Top pick today. Loan growth is solid in the US. This had recently been run as though rates are never going to go higher, so have been focused on cost cutting and ways to be more profitable in a low interest rate environment. You are likely to see good dividend growth with all the US banks. This one also has capital market exposure, and with his view that we are in a bull market for stocks, there is likely to be lots of M&A and underwriting of new issues.

This is having a little bit of a lift now with the idea of a rising rate environment. All the US banks have been mired in regulatory problems, and it has only been about a year ago that they stopped talking about that.

This is one of her lesser favourite diversified financials, and she sees this as Fair Value at this point. They have very low net interest margins. Although she sees mortgage applications being very strong, this bank has not been able to take advantage of that, because of low interest rates. She is not a big fan of this bank.

They rallied last week because of the expectation of raising rates. The only problem he has is that it is under EBV-3. He wants to see a positive transit above this.

A classic technical analysis rule is that old support, when it is broken, becomes resistance. That happened earlier this year. The chart looks like it is trying to break that resistance of around $15. If true, the next target would be the old level of resistance. This looks like it just might do that.