Circle the Wagons With Wells Fargo
01/31/08 - 06:12 AM EST
Jon Markman
Bove has it right when he longs for a time when companies that focused on the average American were better plays than those that relied on politically unstable regions of the world. So Wells Fargo is different from most of its peers today, in a good way. According to Bove, "It raises deposits from Americans to lend to other Americans so that they can buy houses in America and funds their American businesses. How bad can this be?"
For now, the stock has a 4% dividend yield and an extremely attractive 10.7 times multiple on 2009 estimates. Shares are a bit extended right now, so you may wish to wait for a better opportunity to buy for an 18-month target of $40 if this interests you. Keep the shares on a short leash with a protective stop in case my analysis is wrong, as it is right now sitting precariously on its five-year moving average, which has held all declines in the past 12 years. An end-of-month decline under $30 would drop shares into a dark abyss with little significant support until $17 to $20.
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