Bank of America (BAC)

The difference between US and Canadian banks is that the US banks don’t generate as much revenue from retail banking, personal and consumer. They are quite heavy in the investment banking and wealth management. This bank tends to operate more like what we know in Canada, in the sense that 60% of its revenue is retail and 40% is wealth management and investment banking, a nice mix. He has targeted regional banks, in order to trim the fat of the lumpy revenues from investment banking. Although the US economy has been improving, it hasn’t been improving at the same pace in all regions. This is a high-quality name with a reasonable dividend, but hasn’t done well over the last 52 weeks. Wouldn’t be in a rush to buy this, but would look at some of the regional names, such as Columbia Banking System (COLB-Q).

Pretty consistent negative revisions on earnings. A good capital markets business. The balance sheet is really dependant on interest rates. We are in uncertain times. He prefers one of the series of regional banks that merged. He likes a mid-cap Bank ETF: KRB-N.

The US banks have great value right now in relation to book value and don’t have the energy exposure that Canadian banks have. He would prefer Goldman Saks for a US bank. He would buy a US bank for the growth, vs. a Canadian bank for the dividend.

This has been frustrating for a lot of people. Looking back to the financial crisis, this has hardly moved at all. He would prefer J.P. Morgan (JPM-N).

This still has the legacy of the Countryside assets from the 2008 mortgage scandals. It also has Merrill Lynch, so it is seen as a lesser quality name then Wells Fargo (WFC-N). Citigroup (C-N) has 55% of revenue coming from outside of the US, which has caused some concerns. Historically, when there is a rally, it is the financials that lead the market out. He thinks that when the dust settles, these will be good names.

All the US banks are going to work in tandem over time. Some are more senior in terms of their structure and it shows in their valuations. The street is a bit worried the fed will not increase rates at the pace they thought. The market is not as confident in this one as it has some more senior issues.

A huge retail bank, and also very much a capital markets bank. They will get some benefits from rising rates. The capital markets business, for him, is a kind of questionable business so he is avoiding that sector at the present time. They have international exposure, and the strong US$ is going to hurt them to some degree. He wouldn’t be initiating a position today.

(A Top Pick Jan 9/15. Down 3.49%.) Everything looks fine in US banking. Thinks this will do better. The earnings profile going forward looks quite good.

(A Top Pick Nov 27/14. Down 0.15%.) Still likes this, and hopes that this is the year for US banks. Trading below BV. Thinks dividends on US banks are going to go up a lot more over the next year or 2.

He sees nothing wrong with it. 2011 was a pivot point. He would not be discouraged. If we break above $18, it is a break out. The volume has to increase, though.

A stock he thinks will do well and is well positioned going forward. Something stable and steady and gives you a bit of yield, and trades at a 10X multiple.

It looks cheap, but if you go back to pre 2008, it was cheap then. He looks at companies that were trading higher before 2008. Even though BAC-N has been transformed since 2008, he would not see it as a long term hold.

Royal Bank (RY-T) or Bank of America (BAC-N)? Look at the economies of both countries and the balance sheets of both stocks. This one has a lot of good things going forward, specifically if you think rates are going to rise in the US. That will have a tremendous leverage to the uptick in rates.

(Top Pick Feb 18/15, Up 7.55%) Consumer credit started growing again. But it took all the way to December for the Fed to lift rates and it is hard for them to make money on widening spreads when interest rates are not increasing and they run a spread business. He thinks earnings will accelerate with increasing rates.

He is positive on all US banks at the moment. They have been going sideways for quite some time and he feels there is some pent-up energy. Interest rates going up should theoretically be good for them.