|Bid||34.44 x 2900|
|Ask||34.48 x 27000|
|Day's Range||34.35 - 34.96|
|52 Week Range||22.66 - 34.96|
|Beta (5Y Monthly)||1.64|
|PE Ratio (TTM)||12.69|
|Earnings Date||Jan 15, 2020|
|Forward Dividend & Yield||0.72 (2.08%)|
|1y Target Est||34.34|
Veteran value investor Bill Nygren has seen his share of ups and downs, but his long-term performance warrants patience. Here’s where he’s investing now.
[Editor's note: "9 Hot Stocks to Buy Now" was previously published in October 2019. It has since been updated to include the most relevant information available.]In the wake of an apparent Phase 1 trade deal between the U.S. and China, the risks facing the stock market appear to have receded. So while there might still be reasons for caution overall now -- continued trade conflicts and political uncertainty -- there are many opportunities for investors.Here are nine stocks to buy that look particularly attractive.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * These 7 S&P 500 Stocks Will Deliver a Repeat Performance in the Next Decade Hot Stocks to Buy Now: Exxon Mobil (XOM)Past year performance: -7%Source: Shutterstock I'm as surprised as anyone that Exxon Mobil Corporation (NYSE:XOM) makes this list. I've long been skeptical toward XOM. The internal hedge between upstream and downstream operations makes Exxon stock a surprisingly poor play on higher oil prices. Overall, that leads XOM to stay relatively rangebound, as it has been for basically a decade now.With the dividend yield around 5% and a price-earnings (P/E) multiple of 20, Exxon Mobil stock looks like a value play. Meanwhile, management is forecasting that the company's earnings can double by 2025, adding a modest growth component to the story.Obviously, there's a risk that Exxon management is being too optimistic. Years of underperformance relative to peers like Chevron (NYSE:CVX) and even BP (NYSE:BP) have eroded the market's confidence. If Tesla Inc (NASDAQ:TSLA) can lead a true electric car revolution, that, too, could impact demand and pricing going forward. Nathan's Famous (NATH)Past year performance: 6%Recommending a hot dog restaurant owner might seem silly at best. But there's a strong bull case for Nathan's Famous, Inc. (NASDAQ:NATH).Source: FlickrNATH has mostly seen a steady decline in the last few weeks. The stock touched a 52-week (and all-time) high just over $100 in July 2018. It's since come down about 28%, yet the story hasn't really changed all that much.Revenues grew by just about 8% in fiscal 2018. The company's agreement with John Morrell, who manufactures Nathan's product for retail sale and Sam's Club operations, offers huge margins, while its bottom line continues to grow. Food service sales similarly are increasing. * These 7 S&P 500 Stocks Will Deliver a Repeat Performance in the Next Decade The restaurant business has been choppier, but it remains profitable. The "mostly franchised" model there is similar to those of Domino's Pizza (NYSE:DPZ) and Yum! Brands (NYSE:YUM), among others, all of whom are getting well above-market multiples.All told, Nathan's has an attractive licensing model, which leverages revenue growth across the operating businesses. And yet, at 13.15x EV/EBITDA, the stock trades at a significant discount to peers. Bank of America (BAC)Past year performance: 18%Bank of America Corp (NYSE:BAC) is still below its 2018 high and has gained nearly 200% from its July 2016 lows.Source: Shutterstock But I've liked BAC stock for some time now, and, as I wrote previously, I don't see any reason to back off yet. Earnings growth should be solid for the foreseeable future.BofA itself has executed nicely over the past few years. The company's credit profile is solid and its stock has outperformed other big banks.And despite the big run, it's not as if BAC is expensive. The stock still trades at a P/E ratio of 13, excluding certain items Unless the economy turns south quickly, that seems too cheap. So it looks like the big run in Bank of America stock isn't over yet. Roku (ROKU)Past year performance: 154%Roku Inc (NASDAQ:ROKU) undoubtedly is the riskiest stock on this list, and there certainly is a case for caution. The company remains unprofitable and a 16.7x EV/revenue multiple isn't cheap.Source: Shutterstock But with more than 30 million active users, Roku is a fast-growing platform deserving of its high-ish multiple. This year, Roku looks to build a true content ecosystem, and from a subscriber standpoint, already has surpassed Charter Communications (NASDAQ:CHTR) and trails only AT&T (NYSE:T) and Comcast Corporation (NASDAQ:CMCSA).Again, this is a high-risk play but it's also a high-reward opportunity. * These 7 S&P 500 Stocks Will Deliver a Repeat Performance in the Next Decade Margins in the platform segment are very attractive and should allow Roku to turn profitable relatively quickly. International markets remain largely untapped. There's a case for waiting for a better entry point, or selling puts. But I like ROKU at these levels for the growth/high-risk portion of an investor's portfolio. Brunswick (BC)Past year performance: 30%Brunswick Corporation (NYSE:BC) is due for a breakout. The boat, engine and fitness equipment manufacturer is trading around $61, and despite a boating sector that has roared of late, the industry leader has been mostly left out.Source: Shutterstock Efforts to build out a fitness business have had mixed results and may support some of the market's skepticism toward the stock. But Brunswick now is spinning that business off, returning to be a boating pure-play. * These 7 S&P 500 Stocks Will Deliver a Repeat Performance in the Next Decade Cyclical risk is worth noting, and there are questions as to whether millennials will have the same fervor for boating as their parents. But at ten times forward EPS, BC is easily worth those risks.And if the stock finally can break through resistance, a breakout toward $70-plus seems likely. Pfizer (PFE)Past year performance: -12%Few investors like the pharmaceutical space at this point or even healthcare as a whole. But amidst that negativity, Pfizer Inc. (NYSE:PFE) looks forgotten.Source: Shutterstock This still is the most valuable drug manufacturer in the world. It trades at a P/E ratio of just 13.5, a multiple that suggests profits will stay basically flat in perpetuity. To top it off, PFE offers a 3.74% dividend yield.Obviously, there are risks here. Drug pricing continues to be subject to political scrutiny (though the spotlight seems to have dimmed of late). Revenue growth has flattened out of late.But Pfizer still is growing its top line. Tom Taulli previously cited three reasons to buy Pfizer stock -- and I think he's got it about right. Valmont Industries (VMI)Past year performance: 29%Valmont Industries, Inc. (NYSE:VMI) offers a diversified portfolio business and has been relatively weak across the board of late. The irrigation business has been hit by years of declining farm income. Support structures manufactured for utilities and highways have seen choppy demand due to uneven government spending. Mining weakness has had an impact on Valmont's smaller businesses as well.Source: Shutterstock Valmont is a cyclical business where the cycles simply haven't been much in the company's favor. Yet that should start to change. 5G and increasing wireless usage should help the company's business with cellular phone companies.Irrigation demand almost has to return at some point. * These 7 S&P 500 Stocks Will Deliver a Repeat Performance in the Next Decade Concerns about the tariffs on steel likely have hit VMI. But many of Valmont's contracts are "pass-through," which limits the direct impact of those higher costs on the company itself. Despite uneven demand, EPS has been growing steadily and should do so in 2020 as well. American Eagle Outfitters (AEO)Past year performance: -18.4%American Eagle Outfitters (NYSE:AEO) is one of the, if not the, best stocks in retail, and that's kind of the problem. Mall retailing, in particular, has been a very tough space over the past few years, and it's not just the impact of Amazon.com, Inc. (NASDAQ:AMZN) and other online retailers. Traffic continues to decline, which pressures sales and has led to intense competition on price, hurting margins.Source: Mike Mozart via Flickr (Modified)But American Eagle has survived rather well so far, keeping comps positive and earnings stable. And yet this stock, too, trades at around 9.7x EPS,. And American Eagle has an ace in the hole: its aerie line, which continues to grow at a breakneck pace.The company's bralettes and other products clearly are taking share from L Brands Inc (NYSE:LB) unit Victoria's Secret. And the e-commerce growth in that business, and for American Eagle as a whole, suggests an ability to dodge the intense pressure on mall-based retailers.In short, American Eagle isn't going anywhere. There's enough here to suggest American Eagle can eke out some growth, and a 3.7% dividend provides income in the meantime.The stock already is recovering, being one of the only on this list with a positive chart over the past year, and AEO stock should continue to perform well. Longer-term, there's still room for consistent growth and more upside. United Parcel Service (UPS)Past year performance: 18.5% United Parcel Service, Inc. (NYSE:UPS) is going to have to spend to add capacity, and in this space, too, there's the ever-present threat of Amazon.Source: Shutterstock But UPS is an entrenched leader, along with rival FedEx Corporation (NYSE:FDX), and it at worst can co-exist with Amazon. Ecommerce growth overall should continue to increase demand; there's enough room for multiple players in the global market. * These 7 S&P 500 Stocks Will Deliver a Repeat Performance in the Next Decade Meanwhile, the selloff and benefits from tax reform mean that UPS now is trading at a P/E ratio of just 21. And the stock yields a healthy 3.3%. Investors clearly see a risk that growth will decelerate, but UPS stock is priced as if that deceleration is guaranteed.As of this writing, Vince Martin is long shares of Exxon Mobil. He has no positions in any other securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * These 7 S&P 500 Stocks Will Deliver a Repeat Performance in the Next Decade * 7 Tech Stocks to Stuff Your Stocking With * 7 Sinfully Good Casino Stocks That Could Win the Jackpot in 2020 The post 9 Hot Stocks to Buy Now appeared first on InvestorPlace.
Report Includes 6 Interviews with 2019 Corporate Governance Forum Speakers Bob Marese, Managing Director, Mackenzie Partners Lyndon Park, Managing Director and Head of Corporate Governance Solutions, ICR Lawrence Elbaum, Partner and Co-Head of Activism Defense, Vinson & Elkins LLP Harry Cendrowski, Managing Director, Cendrowski Corporate Advisors Kellie Huennekens, Head of Americas, Nasdaq Center for Corporate […]
(Bloomberg Opinion) -- It looks as if after all the talk, all the back-and-forth and all the market swings, the U.S. and China have finally reached the terms of a “phase-one” trade deal.The message from the world’s biggest bond market: Don’t get too excited about what that means for the economic outlook.For the first half of the U.S. trading session, long-term U.S. yields surged by 10 basis points, on pace for one of the three largest increases of 2019, on the news that U.S. negotiators were offering to cut existing tariffs on Chinese imports by 50% and also cancel the tariffs that were set to take effect on Dec. 15. But then the Treasury Department auctioned $16 billion of 30-year bonds at 1 p.m. New York time, which provided a reality check of what a small agreement between the world’s two largest economies would mean.Not only did the auction price at a yield 2 basis points lower than the market was indicating before the offering, but primary dealers, which are required to submit bids, took a record-low 15.5% share. That means investors who weren’t obligated to buy the longest-dated Treasuries rushed to take advantage of the trade-induced sell-off. Simply put, this sort of demand is rare. Yields ended the trading session off their highs.It’s perilous to read too much into a single Treasury auction. And last month’s 30-year bond sale also set a record for low primary-dealer takedown, at 20.7%, so Thursday’s result could just be continuing that trend.Still, if investors believed that this potential trade deal was truly a game-changer for markets and the global economy, I doubt they’d be so shortsighted to jump at a 10 basis-point move to the highest yield in a month. The effective duration of 30-year Treasuries is about 22 years, according to ICE Bank of America Merrill Lynch index data, meaning that another 10 basis-point increase would saddle owners of these new bonds with a 2.2% loss. If yields rose in the next six months to where they were as recently as April, bondholders would stand to lose more than 20%.I once called long-dated Treasuries one of the most dangerous parts of the bond market. And in July 2016, when yields hit record lows, it was for good reason: It takes a tiny shift in interest rates to cause huge gains or losses. There’s no credit spread to fall back on, as there is with corporate bonds. They’re not like two- or three-year notes, which are closely tethered to the Federal Reserve’s policy decisions. Rather, 30-year bonds are entirely subject to the whims of markets. Case in point: Recession fears reached a fever pitch in August, and long-bond yields tumbled to a record low. For a brief moment, 30-year Treasury bonds yielded less than three-month bills.Judging by the Fed’s confidence coming out of its meeting this week, the economic doomsday scenario appears to be in the rearview mirror. But the prospect of a somewhat stagnant economy is still the consensus. A Bloomberg survey shows analysts expect U.S. real gross domestic product to grow just 1.8% in 2020, the slowest pace since 2016. That could change with a trade agreement. Tom Orlik, chief economist at Bloomberg Economics, said “a deal that takes tariffs back to May 2019 levels, and provides certainty that the truce will hold, could deliver a 0.6% boost to global GDP.”For now, the deal seems to be that the U.S. will not introduce a new wave of tariffs on about $160 billion of consumer goods on Dec. 15 in exchange for a promise by China to buy more U.S. agricultural goods. Officials also apparently discussed possible reductions of existing duties on Chinese products. The bond market has already voiced its opinion: Not impressed.To contact the author of this story: Brian Chappatta at email@example.comTo contact the editor responsible for this story: Daniel Niemi at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Saudi Aramco is poised to pay a combined $64 million to the banks that arranged the world’s largest initial public offering, a letdown for the Wall Street firms that pitched aggressively for a spot on the deal, people with knowledge of the matter said.The Gulf oil giant plans to pay the top local banks on the deal -- known as joint global coordinators -- 39 million riyals ($10.4 million) apiece, according to the people. The top foreign banks on the deal are set to each get 13 million riyals, or the equivalent of $3.5 million, the people said, asking not to be identified because the information is private.The figures represent the base fee being paid by Aramco, which will decide the amount of discretionary incentive fees at a later date, the people said. If Aramco opts to dole out additional money, most of it would likely go to the domestic banks that brought in the bulk of the IPO orders.Aramco raised $25.6 billion in its share sale, which became a local affair after foreign fund managers shunned its premium valuation. The base fee, representing 0.25% of the funds raised, pales in comparison to other large deals.IPO banks globally earned average fees equal to 4.1% of the deal size this year, up from 3.6% last year, according to data compiled by Bloomberg. Chinese internet giant Alibaba Group Holding Ltd., which raised $25 billion in its 2014 IPO, paid about $300 million to its underwriters including performance fees.Saudi Arabia didn’t need the Wall Street firms’ international networks after it scrapped roadshows outside the Middle East, turning instead to local retail buyers and wealthy families to shore up the deal. The foreign underwriters on the deal will barely make enough to cover their costs, Bloomberg News has reported.Aramco will pay local banks serving as bookrunners, a more junior role, about 5 million riyals each while foreign banks in that position will be paid about 2 million riyals apiece, the people said. The company declined to comment.(Updates with details of fee breakdown in third paragraph.)\--With assistance from Dinesh Nair.To contact the reporters on this story: Sarah Algethami in Riyadh at email@example.com;Matthew Martin in Dubai at firstname.lastname@example.org;Archana Narayanan in Dubai at email@example.comTo contact the editors responsible for this story: Ben Scent at firstname.lastname@example.org, ;Stefania Bianchi at email@example.com, Michael HythaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The Fed kept interest rates unchanged at the Federal Open Market Committee (FOMC) Meeting and forecasts reflect no change of rate throughout 2020.
Houston entrepreneurs are concerned about rising health care costs and the strength of the U.S. dollar going into 2020, according to a recent Bank of America report.
Bank of America is incentivizing customers to do more of their day-to-day simple transactions digitally by paying them $15. It is cheaper for the bank and informs customers about options they may not know.
Saudi Aramco’s shares rose 10 per cent during its second day of trading on Thursday, pushing the state oil group’s valuation above $2tn. Shares climbed by the maximum daily limit to SR38.7 before profit-taking pushed the price down, according to the website of Riyadh’s Tadawul stock exchange. for the company has long been sought by Saudi Arabia’s ambitious Crown Prince Mohammed bin Salman, and Riyadh has worked to backstop the flotation to ensure its success.
Fed Chairman Jerome Powell said Wednesday that the Fed could "adjust the details" of its balance sheet policies and repo operations to prevent another flare-up in money markets.
Bank of America Corp (NYSE: BAC ) expanded its free trading offering Monday with the elimination of commissions on stock, ETF and options trades. This development follows Robinhood’s pioneering of the ...
Bank of America today announced that its artificial intelligence (AI)-driven virtual financial assistant, Erica®, has surpassed 10 million users since its nationwide rollout in June 2018 and is on track to complete 100 million client requests in the coming weeks. These milestones coincide with the introduction of several new Erica insights within the bank’s award-winning mobile app that offer clients personalized, proactive guidance to help them stay on top of their finances.
(Bloomberg Opinion) -- For those following 2020 market outlooks, the past two days have been dominated by BlackRock Inc. The world’s largest money manager began unveiling its calls for the coming year on Monday, and on Tuesday it added TV appearances and journalist discussions with its most senior investors and strategists around the globe.The broadest takeaway is that 2019’s “extraordinary returns” across asset classes won’t continue over the next 12 months. That’s not particularly riveting, though, given that BlackRock itself said in 2016 that investors should expect smaller gains for pretty much everything in the coming five years. In 2017, Bill Gross made a similar call. And around this time last year, Ray Dalio, founder of Bridgewater Associates and recent mentor to hip-hop entrepreneur Sean “Diddy” Combs, argued investors “need to prepare for lower expected returns in the future.” After the longest expansion in U.S. history, it’s a fairly safe call to make.A bolder call from the money manager: Inflation poses the biggest risk in 2020 — or, at least, it’s what investors don’t seem to have on their radar. Here’s how BlackRock Vice Chairman Philipp Hildebrand explained it on Bloomberg TV:“The market is not expecting anything around inflation, basically, and I suspect that when we see each other a year from now, look back at this, we will say ‘wow, inflation actually was a bit more of a story than we thought.’ Again, I don’t think we need to worry. I don’t want in any way to paint the picture of dramatic inflation, but I do think when you look at the details, when you look at the employment report, when you look even at the latest European numbers, wage pressures are at peak expansion levels, so I do expect that inflation is one of the underappreciated risks for 2020.”Hildebrand is a former Swiss National Bank president, so he’s intimately familiar with global central bankers’ inability to stoke price growth in the wake of the global financial crisis. Critics might dismiss the outlook for relying on the Phillips Curve and other assumptions that don’t truly stand up to scrutiny in this economy. Just last week, University of Michigan survey data showed Americans expect prices to rise by just 2.3% annually over the next five to 10 years, matching the lowest level on record. The thing is, BlackRock is hardly alone in thinking 2020 might finally be the year inflation stages a comeback. And the advice is simple: Buy Treasury Inflation-Protected Securities.Bank of New York Mellon Corp.’s 2020 macro outlook is titled “Inflation Insurance Is Underrated.” Bank of America Corp.’s best technical trade for next year is to buy U.S. 10-year TIPS breakevens. Even Steven Major at HSBC Holdings Plc, who has one of the lowest year-end 2020 forecasts for 10-year U.S. yields, at 1.5%, said TIPS appear “underappreciated” and “offer attractive diversification properties.” Citigroup Inc. strategists went so far as to raise the specter of stagflation: “We see some upside risks to inflation. If these materialize against a weaker growth backdrop, it would be a bad combination for risk assets.” BlackRock, too, is pondering whether the push toward de-globalization will push prices higher because of supply shocks while economic growth slows. It lists stagflation as a “potential regime shift” from the current one, dubbed “slowdown.”Now, betting on higher-than-expected inflation isn’t as cheap as it was two months ago. The 10-year breakeven rate dipped to 1.47 percentage points on Oct. 8, the lowest in more than three years. It has climbed to 1.7 percentage points since then. The measure reflects the difference between yields for nominal and inflation-linked bonds. When it’s low, it indicates traders don’t see much reason to shield themselves from accelerating price growth over the next decade. The recent peak was 2.2 percentage points in May 2018.This talk about reviving inflation happens to coincide with the recent death of Paul Volcker, the former Federal Reserve chairman who famously tamed double-digit price growth. As David Beckworth, a former economist at the Treasury Department, noted on Twitter, spiraling inflation was viewed by some Americans in the 1970s and early 1980s as the most important issue facing the country.That context is crucial because it’s unclear what a meaningful bump higher in inflation would mean to a general public that hasn’t seen the core consumer price index at 2.5% in more than a decade, or at 3% since the mid-1990s (it peaked at 13.6% in 1980). Would it rattle the American consumer’s seemingly unshakable confidence? Or is this just more of Wall Street and the Fed getting worked up over tenths of percentage points in a measure that some consider detached from reality anyway?Crucially, the Fed appears willing to tolerate higher inflation in something of a “make-up strategy” after years of undershooting 2%. Typically, stocks and other risky assets might balk at quicker price growth on bets that the central bank would raise interest rates. But it’s difficult to even fathom what sort of conditions would make Chair Jerome Powell and his colleagues consider increasing the fed funds rate again after reducing it three times in as many months. That means inflation in 2020 might not produce the usual chain reaction.Even if the inflation rebound story isn’t persuasive, consider this: TIPS are on pace to top Treasuries again in 2019, which would be the third year in the past four that the inflation-linked securities outperformed. They may not be the sexiest investment out there, but in BlackRock’s eyes, TIPS are for winners.To contact the author of this story: Brian Chappatta at firstname.lastname@example.orgTo contact the editor responsible for this story: Daniel Niemi at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose...
Bank of America chief executive Brian Moynihan has joined a chorus of US bankers predicting a strong end to the year for trading and investment banking. Mr Moynihan told investors on Wednesday that the two divisions would record higher fourth-quarter revenues than a year earlier, a day after upbeat remarks from senior executives at Citigroup, JPMorgan Chase and Goldman Sachs. fourth quarter in some of Wall Street’s biggest businesses in 2018, including double-digit percentage declines in fixed-income revenues at each of the big five banks in a period when investment banking revenues also fell for all major players except JPMorgan.
Wells Fargo (NYSE:WFC) stock has risen over 25% since its August lows. In late September, Wells Fargo announced it had hired a new CEO. And it's safe to say that WFC stock has been on a sort of honeymoon hike since then. But for many investors, questions remain about its difficult fundamentals and relative valuation.Source: Martina Badini / Shutterstock.com The market seems to believe that new CEO Charles Scharf can turn things around at Wells Fargo. He was poached from BNY Mellon (NYSE:BNY) where he was CEO. Scharf also served as the CEO of Visa (NYSE:V) and was a protege of Jamie Dimon, the CEO of JPMorgan Chase (NYSE:JPM). Fortune Magazine wrote a glowing article about his expertise in running financial institutions.But the truth is Scharf hasn't really tackled a company with as many scandals as Wells Fargo. Most of his jobs have been with fairly well-established financial institutions.InvestorPlace - Stock Market News, Stock Advice & Trading TipsWells Fargo has had to deal with numerous scandals over the past decade. Fortune pointed out that these include a fake-accounts scandal, questionable mortgage and auto-lending practice and red flags in its foreign exchange and wealth management businesses. Wells Fargo's Fundamental IssuesA Raymond James analyst recently cut his rating on WFC stock to "underperform," noting that he believes that with the company, "it will get worse before it gets better." In Wall Street speak, that is the equivalent of a "sell" rating. * 10 Best-Performing Growth Stocks of the 2010s Source: Chart by Mark R. Hake The analyst, David Long, said he expects revenue to contract for a fourth straight year in 2020. He also believes that Wells Fargo's profitability in a number of areas will lag its competitors.Moreover, he said that both JPM stock and Bank of America (NYSE:BAC) stock are cheaper than Wells Fargo stock.I looked into these points. Based on estimates provided by Seeking Alpha, 14 analysts expect revenue of just $80 billion (after loan loss provisions) for 2020. This is 7% below the company's $85 billion in 2017.Analysts all predict positive revenue gains for WFC's major competitors. This can be seen in the table to the right. The average cumulative revenue growth over the same four years is 15%, against WFC's expected 7% drop.Source: Chart by Mark R. Hake As interest rates keep falling it's very hard to make revenue rise. Wells Fargo has to become a more attractive place for people to borrow and deposit their money. It will have to erase its damaged image in order for revenue to rise. A Problematic ValuationWells Fargo stock is more expensive than the average of its peers. The table below shows that the average forward price-to-earnings ratio for its competitors is 11 times. This is lower than Wells Fargo's 12.6.Source: Chart by Mark R. Hake Some point out that Wells Fargo has a higher dividend yield than its peers. I looked into this as well. It is true that Wells Fargo's 3.8% dividend yield is higher than its peers. JPM stock has a 2.7% dividend yield, and BAC's yield is 2.2%.But Wells Fargo has a higher dividend payout ratio. It distributes 40% of its earnings, according to Yahoo! Finance. Its peers pay out less of their earnings. Their dividend yields would be closer to Wells Fargo's dividend yield at the same payout ratio.Others point out that Wells Fargo has a robust share buyback policy. That is true. Wells Fargo's capital plan, approved in June by the Federal Reserve, calls for buying back up to $23 billion worth of its shares. That represents about 10% of its market value. Obviously that accounts for a huge portion of the spike in the Wells Fargo stock price since then.But JPMorgan also got approval for a huge share buyback. Its approved plan is for up to $29.4 billion in share repurchases. Although that is a larger program than at Wells Fargo, it represents a lower 6.9% of JPM's stock market value.Wells Fargo is more aggressive with buybacks, but JPM stock is cheaper. I would rather take the cheaper stock. The Bottom Line on WFC StockWarren Buffett recently trimmed the Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B) stake in Wells Fargo stock. Berkshire Hathaway was Wells Fargo's largest shareholder in March when it owned 451.4 million shares or 9.9% of the bank, according to the proxy statement.But now Berkshire only owns 378.4 million shares. That is a reduction of 73 million shares or 16%, in half a year. I believe Buffett thinks it is overvalued.Wells Fargo has not bought back 16% of its shares since March. For example, Berkshire would normally have to trim its stake to stay below 9.9% of the bank's shares outstanding. Otherwise, it would need to get approval to be a bank holding company, according to federal regulations.By my calculations, Berkshire Hathaway's stake in Wells Fargo is now about 9%. This is despite the 5.9% lower number of shares outstanding at Wells Fargo since March. In other words, Buffett has sold into the Wells Fargo share repurchase program.That should tell you a lot. Wells Fargo was the fourth-largest holding at Berkshire Hathaway. Maybe it isn't as important to Buffett anymore.Maybe you should sell too.As of this writing, Mark Hake, CFA does not hold a position in any of the aforementioned securities. Mark Hake runs the Total Yield Value Guide which you can review here. The Guide focuses on high total yield value stocks. Subscribers get a two-week free trial. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * The 10 Best-Performing Growth Stocks of the 2010s * 10 Stocks With Little or No Debt to Own for the Next 50 Years * 5 Restaurant Stocks Dominating Holiday Season Foot Traffic The post Ignore the Honeymoon Hike: Wells Fargo Stock Has Already Peaked appeared first on InvestorPlace.
When it comes to investing in bank stocks, a flattening yield curve, Fed rate cuts and illiquid capital markets are typically considered red flags that send investors running for the hills.
Bank of America expands commission-free trading to all self-directed Merrill Edge investors, while Wells Fargo’s online brokerage scraps commissions.
The big run in (JPM) stock is petering out, say analysts at Keefe, Bruyette & Woods. Brian Kleinhanzl at KBW said he still views (JPM) (JPM) as best-in-class in terms of quality, but he thinks investors should own stocks where consensus earnings estimates have the potential to rise. “Looking ahead, we believe that further upward estimate revisions are needed from here in order for JPM to outperform in the coming year and our estimates are roughly in line with consensus for 2020 earnings per share,” Kleinhanzl said.
Bank of America expanded unlimited free trades to all Merrill Lynch individual investors, after Charles Schwab, TD Ameritrade and E-Trade ditched stock and ETF trading fees.