Citigroup Inc. (C)

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.

Very undervalued. Stock hasn’t done much getting through all the regulatory issues that are happening. A lot of those regulatory and regulatory costs are behind them. This is on track of its long-term goal of strengthening its global presence. In consumer and corporate lending they are divesting out of a lot of things that they don’t want to be in. Going to return very meaningful levels of their capital to shareholders, whether through share buybacks or dividend increases. Last year they signed a deal with Costco Wholesale (COST-Q) to issue credit cards, which he expects will be a big revenue kick for their credit card division. Trading at a pretty big discount to its peer group. Yield of 0.8%.

It is going to get a kick in the pants and get moving here. This is a multi-year trade for income markets. We are going to see a tremendous amount of capital fed back to investors here. He was impressed with how they have tried to fix their problem assets. They will do well in a rising rate environment. A decent way to play it.