Citigroup Inc. (C)

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.

A challenged bank, of all the US banks they are doing the poorest. The asset base is the poorest. He would look for someone else to buy.

CEO is doing a good job and concentrating the bank on core efficiencies. They are getting out of a lot of countries and out of risk areas. They go through another stress test in March, and he is quite hopeful they will be allowed to increase their dividend and their buyback. Relatively cheap on a variety of metrics. Trading at about 10X earnings compared to the average bank that is trading at about 13X. Also, trading at about 90% of tangible book value compared to the average bank of 163%. Yield of 0.08%.

This Is his least favourite of the US banks. They really didn’t do the reform coming out of 2008. They were slow to do it. They hung onto legacy businesses. They have a lot of international exposure and this is the thing that he is cautious on. He likes American banks in general.

He sees the greatest opportunity in the US financials in the consumer. The best way to play that is through regional banks. Since 2008 this bank, like the other US banks, has made specific efforts to become more conservative, so they divested of their more risky assets. (See Top Picks.)

(Top Pick Jan 14/14, Down 3.68%) They have a strong month and then they go backwards. They are spinning their wheels. They seem to be fined for something every day. You have to be market weight financials. Does not know when the FED will allow them increase dividend.