Richard CroftWells FargoWFCTOP PICKDec 19, 2013

She just bought more. Is surprised it hasn't recovered from being down 11% this year. The last quarter was very good. She expects them to gain market share going forward. Their Return on Tangible Common Equity (ROTCE) targets of 17-18% are not aggressive and could do better, and their guide of net-interest income was better for the full year. At 1.5x book is attractive. The bank has lagged peers but will catch up in coming quarters.

Yesterday, they reported a revenue miss but an earnings beat at 13% earnings growth. Net interest income was light, and net interest margin was stable and came in higher than expected, slightly (they've missed this 9 of the last 10 quarters). Numbers grew in investment banking though the trading and wealth management businesses came up short. Cost controls remain, though. Shares fell 3% yesterday, so he'd buy on this pullback.

 They report Tuesday. It trades at only 10x PE 2027. The CEO will deliver.

Where it stands out (not in a good way) is that its ROE is middle of the pack. Riskier credit, with non-performing loan ratios higher than average. Efficiency ratio is a high-side outlier. Chart's not that great.

Prefers JPM.

It has been the cheapest US bank for 30 years, but they perpetually have management issues. JPM and MS are preferred.

US bank PEs are lower than Canadian ones, more reasonable. But WFC was under a cap after being penalized, but now that cap is finished so WFC is catching up. WFC is taking on more car and credit card loans at the wrong time in the cycle; there are more delinquencies.

Challenge is its very traditional lending business. Cap on balance sheet has been removed, and shares have improved somewhat. Trouble is, peers are having really great results.

You have to rank the US banks, and this one is not his favourite. Execution issues.

They report Tuesday. Not an earnings story, but a long-term turnaround. Led by a good CEO who is buying back a lot of shares.

There's worry that AI could disrupt banking. They have a low-cost deposit base and cross-sell into other areas. Performance is good and they have resolved past problems.

It just reported a top and bottom line miss: 4.5% sales growth, 13% earnings growth and a 64% efficiency ratio in Q4 YOY. The earnings shortfall came from higher severance expenses. The business is doing well, but not as well as he and Wall Street were hoping. Still believes in this long-term, but took some shares off the table yesterday. Is still more downside.

It reports Wednesday. The CEO has enlarged operations to a full corporate and individual bank, including M&A operations. And they are constantly paring costs and surprising us with its efficiency.

Sales and earnings beat, some of that was from lower provisions for credit losses. WF cut their full-year forecast. Shares were punished by 5% yesterday. He's sticking by this, though. Trusts the CEO to get things back on track.

Was downgraded today. WFC just got out of the penalty box after Washington lifted its asset cap to allow WFC to do more lending. Also, the bank stocks have become leaders

Friday kicks off bank earnings season, a sector that has been crushed, because Wall Street expects a downturn in the economy. WFC was doing well into it slammed into Trump's tariffs. The CEO will have to be cautious on Friday; he has no choice. But shares won't rally on that sentiment.