Citigroup Inc. (C)

Sell Citigroup (C-N) and buy Wells Fargo (WFC-N)? If you understand the differences between the 2 banks and make considered decisions, then you could. He owns both. This one is a valuation play trading at about 70% of tangible Book and the average is at around 160%. Trades at about 10X earnings, while the average bank is around 13X. It just depends on what you are looking for in a bank. They are going to move roughly together, but with a positive economic background, this one might recover more quickly because of the valuation spread.

Chart shows a little upward trend. $52’s a pretty decent support level. A lot of stuff is just starting to roll over though. If it holds $52, this is probably a pretty good deal.

US banks are in a tough position overall. Thinks litigation is going to continue. All the banks are under a bit of a watch in having to go to the Fed with their friends in the Fed’s telling them what they are allowed to do.

(A Top Pick April 29/14. Up 17.45%.) American banks are moving out of the period of time where they were getting lawsuited to death. The mortgage market is normalizing in the US. Still very cheap. (See Top Picks.)

(A Top Pick Aug 18/14. Up 10.35%.) There is a stealth rally going on in US financials in the big money centred banks. This one is finally breaking out. Had its capital plan approved by the Fed in March. This is a capitals return story. Very cheap on a multiple basis, a de-risked company, has most of the overhang on litigation behind it, and is now positioned to start returning capital. Thinks this could easily be a $75-$80 stock.

Visa (V-N) or CitiGroup (C-N)? From his perspective, he would say this one because it is probably a better investment at this point in time because a) it is much cheaper from a multiple perspective and b) Visa has a much higher multiple.

This is a great buy here. Thinks there has been a change in the direction of long-term interest rates. With that comes a tailwind for financial services, especially the big banks. This is inexpensive and is trading below BV. They are likely to start making money on their net interest margins. Technically the stock broke out just 2 weeks ago to make a new high at $57. Expects very good dividend growth as we go forward. (See Top Picks.)

US banks have been doing rather well and are finally getting some traction. Keeping up with its peers and looks favourable. It is trying to make a breakout. Thinks this works higher with the rest of the group.

He owns Wells Fargo. If you look at the PE and long term potential of US banks, the capital gains potential is good because they are coming off the lows. This one probably has more potential going forward. Money center banks are those centered in New York. The others are regional banks.

As the anticipation of interest rates moves higher, it is really good news for this group. His model price is $65, a 15% upside.

It was in a range for about two years and now is breaking out nicely. It was very powerful resistance that it broke through. The fair market value is huge. They could not raise their dividend so they bought back stock and this was one of the few times it really made sense to do so.

This is probably the bank that is best positioned right now. Their asset quality has been improving. They have been focusing on their credit card business. As the rates go higher they make money on the float. 50% of revenue comes from outside the US. It is inexpensive compared to its peers. Thinks he will get good dividend growth. There are a lot of drivers for this stock.

(Market Call Minute.) Cheap and looks awfully good. It has to break through about $60. It has tremendous potential.

Regarding the US recovery in the last 5 years, the main sector that has not been participating is the housing recovery. Expects this stems a lot from when housing had the big crash 5 years ago, so it is a sort of reluctant recovery that is going on. He is looking for the yield curve to steepen this year. The housing and job recovery has gone on long enough now that this sector in the economy is really going to start to go. Yield of 0.7%.

Big US banks would be one of the safer places to be in the US. You will probably start to see dividends start or increase with the US banks. Investment banks have done better than banking banks. He thinks this one could do fairly well.