Citigroup Inc. (C)

Citigroup beat Q3 earnings by 5 cents and raised their full-year guidance. He sees 20% EPS growth.

Bank of America vs. Citigroup Prefers BAC. Citigroup is cheaper though. But BAC has better opportunities with a strong banking franchise in the U.S; their Merill Lynch franchise is also good. Trading at 1.1x book that should grow. Citirgroup is reducing costs and technology will drive growth here. Can do only small acquisitions now, not large, though regulations are easing. Citi trades at a lower multiple, but BAC holds more opportunity.

The US banks have underperformed, and are a canary in the coalmine for the larger market. That said, there's support for Citigroup (earnings, international exposure, etc.) and the banks benefit from rising interest rates. Their valuation and re-structuring all work, all good. This is one of the better US banks.

After 10 years after the Financial Crisis there is the valuation differential with other senior players in the market. Organic earnings growth. Trading at book value. Great Management. Quiet, never hear from them which is what he loves about them. Yield of 2.5%. (Analysts’ price target is $84.18)

BAC-N vs. C-N. Why is C-N momentum faster than BAC-N? It is not just about the quality of that business but also what you are paying to acquire it. Both of these names longer term will be okay. He likes BAC-N. It is diversified and heavily into the US economy.

A too-big-to-fail bank that they continue to recommend. They have been able to get 13-14% ROE through every market gyration following the 2008 financial crisis. Their business strategy is more conservative today and the multiple trades at good value. He expects the dividend to continue to grow and the PE is only 11.4. Yield 2.4%.

You won't go wrong with Canadian banks even though they are more expensive than US banks. C-N has never really recovered from the financial crisis. He would prefer BNS-T because it is a more stable business

(A Top Pick Aug 4/17, Up 6%) He has had good returns since he has bought it but it has gone flat. They have room to expand their dividends even more. They are on an aggressive buy back program. If the US equity markets are going to go higher it has to be with the financials. He is still staying with it. There is about 9% upside according to model price.

Comparing this to Citigroup: he owns both stocks. Both came out of the 2008 crisis in worse shape than the other large money center banks; both have recovered substantially and are trading at a narrower discount to them now. He expects the gap to close further. Citi trades at a greater discount and has more upside potential. The CEO at Citigroup keeps his head down, working on the company’s business. He doesn’t show up much in the press reports; he just does a good job. (Analysts’ price target is $83.04)

He likes the US banks. He sees good valuations here. There is a strong economy and strong credit growth. This will help fuel this stock. It is a good buy.

BAC vs Citigroup: 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 Citi and it too will do better. He would add to his BAC position. He thinks U.S. banks in general will have another run.

(A Top Pick July 11, 2017. Up 6%). The too-big-to-fail banks have finally recovered and the market trusts their balance sheets. They have given dividend increases and just passed the stress tests. His model price shows a 6% upside but they need to perform well again before rising further.

It's trading 5% below book value. Its international component concerns investors. It has universal buy signals on Wall St., but his concern is that it hasn't corrected enough for him to get stopped out of it.