♟ Buy This Bank Stock If It Hits $30 Tomorrow

 
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Buy This Bank Stock If It Hits $30 Tomorrow
Karim Rahemtulla, Head Fundamental Tactician, Monument Traders Alliance
Pawn Chess Piece This could be the top bank stock trade of 2021...
 
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Karim Rahemtulla
Bank stocks will start reporting earnings tomorrow and have already run up quite a bit since December. This means they might be ripe for a "sell on the news" situation.

Banks were hammered by the effects of COVID-19 early on in the crisis. The big players like Bank of America, JPMorgan and Citigroup all saw shares fall by as much as 50% from pre-COVID-19 levels. Some, like Wells Fargo (NYSE: WFC), dropped even more.
 
Wells Fargo Daily Chart
 
The Fed forced them to tighten their belts, cut, reduce or limit their dividends, stop share buybacks, and use very stringent lending standards.

They're not out of the woods yet, but the sector is much healthier than it was six months ago.

This improvement can be seen in several ways...
  1. Deposits are increasing.
  2. Loan losses are moderating and reserving less quarter over quarter.
  3. Banks are buying back their own shares again as the Fed recognizes that the trillions in stimulus checks have benefited them by reducing loan losses.
In fact, many banks should begin to claw back the money they set aside, which will show up in their earnings reports over the next few days.

So which bank should you buy?

My pick is Wells Fargo, but not at current levels. I would buy Wells Fargo with a few conditions...
  • Buy the first half on a pullback to less than $30 per share.
  • Add the second half at $28 or less to make up a full position.
Wells Fargo became the poster child for "bad banks" after it was accused of falsifying new customer accounts. It paid a huge price: sanctions on asset accumulation, forced resignation of C-level executives, billions in fines and greater supervision.

After all of that, Wells Fargo shares are now the cheapest of all the major banks based on book value. And the company still maintains a huge base of deposits, more than $1 trillion, and the ability to benefit from an upward-trending economic cycle.

I believe we will see a much better 2021. Trillions in stimulus, vaccines, consumer optimism and rising interest rates are all great news for banks.

Action Plan: In The War Room, I have been pounding the table on banks for months, and members have been in on the story well before the general public chimed in. Isn't it time you got "early access" to the type of economic analysis that could really pad your market returns? Join me now for real-time recommendations!

Yours in smart speculation,
Karim Rahemtulla Signature
Karim Rahemtulla, Head Fundamental Tactician
Monument Traders Alliance
 
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