Give Me the Yield, Keep the Toaster
Kyle is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Where do you do your banking? Personally, I prefer a local bank, as opposed to a larger bank. But that’s as an account holder. As far as putting my investing dollars in financials, I currently only have 2 holdings with financials, neither of which are traditional banks, Goldman Sachs (NYSE: GS), and Visa (NYSE: V). I do not own, but I like Mastercard (NYSE: MA), as well.
The financials have had a rough go of it, to put it mildly, but there could be room for large U.S. banks to make a bit of a run in 2012. Of the large banks I would say the best of the bunch, in terms of upside, is JP Morgan Chase (NYSE: JPM). I am not taking a position (for now), but I might consider an entry if the price offers another setup below the $34 level. It currently trades around $35 and offers a juicy 3% yield.
Throughout the course of the year, there will be opportunities for positions in financials, so stay nimble and keep your eyes peeled.
I am also watching for opportunities in the regional banks; I think they aren’t as exposed (internationally) given their size, relative to the JPM’s of the market. Of the regional banks, I am looking at a possible stake in Wells Fargo (NYSE: WFC). I like the fact that the Oracle of Omaha (Warren Buffett) took a position, and I feel that we could see a 10-12% upward move off current $28-$28.50 levels. The dividend is decent at 1.7% and if the financial sector moves up in any fashion, the regional banks will follow suit. BB&T (NYSE: BBT), is another regional to consider, but humbly, I think Wells Fargo offers a bit more upside this year.
Financials have taken a beating, and it could be time to start getting involved. I urge you to practice due diligence and look at charts, listen to earnings calls, look at websites, heck, even take a peek in a branch or two near you. Market days of panic and weakness should offer setups or opportunities to add to a position.
Until next time, from the trading table,
Motley Fool blogger Kyle Metivier holds long positions in Goldman Sachs and Visa, but does not own shares of Mastercard, or any of the banks mentioned. Yet.