JP Morgan Chase & Co (JPM)

Jaime Diamond has done a spectacular job of negotiating and navigating the company through a lot of litigation. They over-reserved for it, so they are drawing down. Thinks the driver is the rising rates in the US, which will give them a lot more room for margin and global reach. They are one of the survivors of the financial chaos and came out stronger than when they went in. Dividend yield of 3.01%.

Likes the idea of owning American banks, because they are going to become prime beneficiaries of interest rates going up. They don’t have the earnings headwinds Canadian banks have, and they don’t have the credit risks that he believes Canadian banks have. This is not one of the banks that he likes because it has a big capital markets area, and he is not interested in that area. Prefers BB&T Corp (BBT-N), a consumer bank, (See Past Picks) and a commercial bank BankUnited (BKU-N) out of Florida.

If you are in the camp that interest rates will start moving higher, then you want to own some of the major financials in the US, including banks. He still likes this one. It is trading nicely and has moved up okay over the last year. Also, trading nicely from a technical perspective.

They are the leader in US banking. If you buy one, you want to own this one, if not WFC-N. It is not as cheap as Canadian banks, but the one to buy if you want to buy the US banking sector. He bought it because the interest rate is more likely than not and JPM-N will benefit from it.

There is nothing wrong with this bank. It is more senior and well-managed. He likes it, but is just not sure that there is not more to gain by being in a different area of the market. Relatively fully priced. It will participate in the banks rising, but on a relative basis it will not be an outperformer compared to the other banks.

(A Top Pick April 7/14. Up 15.66%.) Has been shifting out of the US financials and into the Canadian financials, and sold his holdings. Valuation on Canadian banks is more constructive plus they have a much higher yield.

(Top Pick Sep 18/14, Up 1.17%) They did not have a good quarter. He does not look at them on a quarterly basis. He is going to continue to buy it here.

This will do well with the rest of the large US banks. In terms of valuation, they look strong. In terms of interest rates eventually moving up, they look strong. In terms of litigation being in the rear-view mirror, that is going to help stocks like this. Capital markets are getting better and the housing market is getting better. He doesn’t see selling anytime soon.

If you are buying it you are positive on capital markets. It is a general play on the US economy also. It is generally well run. She holds another bank in the US.

What is the advantage of purchasing the preferred shares? Generally the advantage is that you get a slightly higher dividend yield, but beyond that most people should be comfortable with purchasing the common. Considers this to be one of the finest banks globally, if not the finest. A fabulously run company.

This is one you can put away in your portfolio for years. The yield curve in the US is rising, we have positive capital market flows and thinks we are going to see that continue for years. You want to buy the financials where the domestic economy is doing well. Dividend yield of 2.54%.

Jamie Diamond has done a spectacular job of working this bank through all of their troubles. Likes the growing of their earnings and a lot of their core competencies. They are making a lot of money in a lot of different ways. They will make more money as US interest rates start to come up. The largest bank in the US.

Banks are going to be more sensitive to the effect of the bond market on long rates, rather than what the Fed does. This is a more senior bank and didn’t get hurt as much as the other banks during the 08-09 experience. Because of this, on a recovery you will probably see less of a recovery. Based on that, Bank of America (BAC-N) and Citigroup (C-N) would be better choices. (See Top Picks.)

Banks have been “not loved” for many years. Thinks their litigation costs was a high water mark in the 1^st quarter which is pretty good. Has a pretty good upside target of around $88. This may be one that you hold just for the short term. Alternatively you could buy the Spider Financial ETF (XLF-N) if you don’t want the specific risk.

Valuation is only 10X forward PE. Earnings showed pretty good and rather robust trading in capital markets activity. If interest rates start going up, this would be a bit of a tailwind for them. Buybacks were authorized to go even higher. Dividend yield of 2.49%.