Morgan Stanley (MS)

An inexpensive stock. MS has a strong wealth management business and huge retail brokerage business that have really helped them. However, MS doesn't really have a retail banking franchise, so they lose that cushion in times of volatility. That said, this is one of the top investment banks around. They've enjoyed good numbers. You can do well with this. Good stock, but he prefers the more retail-oriented BAC.

Just bought some. These investment banks are derivatives of the capital markets. If the market is up or down 10 these are going to be up or down 12. Be aware of that. Deregulation and M&A activity booming and volatility coming back works out well for them.

Right time in the cycle to own a name like this. Wealth management, broader exposure to the US investment management business and investment banking side. They favor Bank of America Corp (BAC-N). It has more operating leverage.

(A Top Pick February 12/18 - Up 3%) It is boring. A little too conservative for him. It is doing what is supposed to be doing. He still would own it, just a little disappointed it didn’t do more.

40% of their earnings come from wealth management. They recovered from the financial crisis and are now increasing dividends. They trade at a very low multiple, as is the whole sector. (Analysts’ target: $61.16).

He sold Goldman Sachs and bought Morgan less than a year ago. Goldman had fixed-income problems whereas Morgan Stanley developed a successful wealth management business, benefitting from lots of trading volume these days.

Financials is the largest weighting of their equity portfolios. Like all the US financial names. A fine name. Rates moving higher and asset prices moving higher are going to benefit a name like this. A good name to own. Big winner going forward. Trading at 1.4 book value which is not bad. (Analysts’ price target is $60)

(A Top Pick June 20/17, Up 28%) Different from most U.S. banks, because it's focused on investment management can capital markets. Well-positioned during booming U.S. economy. Could hit mid-$70s in two years thoguh the easy money's been made.

All banks have had a great run then the recent sell-off. Easily $65 for them. Chart looks good compared to other U.S. banks like Goldman Sachs. Likes the walk-up it's enjoyed and the recent re-grouping. (Analysts' price target $61.02)

Switched to this from Goldman Sachs (GS-N), and likes that it has more of a retail focus. It’s become more of a retail operation over the years. Almost 50% of its business is in Investment Management and is growing very smartly. It still has some growth ahead of it.

His model price is right on where it is currently trading. It closed at $54.20, and his model prices $55.10. Big revisions are coming in, especially on the financials. We are seeing higher bond yields, which translates into higher earnings, plus we are coming out of a financial repression and finally getting interest rates up. He thinks financials go materially higher.

If you look at all the US banks' total returns, they are almost identical. The reason is because of ETF's. It’s pretty much a 26%-27% total return over the last 12 months for almost all the big money centred banks. Interest rates are rising, so it’s a good place to be. For access to American banking, he owns Toronto Dominion (TD-T) instead. On the dividend per share being paid out by US banks, they are just getting started. This bank would be deemed more as a money centred bank. A little slower growth than some of the others, because they have more of a global positioning with greater capital markets exposure.

All financials have done well in this environment with lower tax rates and increasing interest rates. She would wait for a pullback before getting into this. The group they are in should do relatively well.

Historically US financial stocks have done very well from approximately January through until April of each year. The chart shows a nice upward trend and the stock recently broke to new highs.

Since the global financial crisis, we have seen lots of deregulation, decreased leverage. Banks have increased fees, and have gone after and tried to grow the wealth management practices. That's a trend which has grown globally. At these levels, and in a rising interest rate environment, this would definitely be a company that would benefit from that scenario and at these levels, you could buy this provided you have a multiyear environment.