NEW YORK (TheStreet) -- KBW analyst David Konrad likes JPMorgan Chase (JPM), U.S. Bancorp (USB) and Wells Fargo (WFC), among the largest banks, as the market digests Friday's monumental downgrade of U.S. debt from a AAA rating to AA+ by Standard & Poor's.
In a report saying that the downgrade was "manageable" but that the country's "economic downdraft is worrisome," Konrad said that "in terms of the universal banks, it is hard to argue that the group is not cheap," and that "the current valuation relative to tangible book value have now fallen below the average valuation during the depth of the crisis from October 2008 through March 30 in 2009."
Supporting Konrad's argument, JPMorgan's shares closed at $35.94 Friday, which was just 1.2 times the company's tangible book value, according to SNL Financial.
The analyst said investors will have "positive bias toward higher-quality names with a higher proportion of revenues being derived from fee income. In this camp, we recommend JPM, USB, and WFC."JPMorgan Chase's shares were down 5% in late morning trading to $35.81, following last week's 7% pullback. U.S. Bancorp's shares were down 3%, changing hands for $22.92, following a 9% decline last week. Wells Fargo was down "only" 2% to $24.76, following last week's 9% decline.
Philip van Doorn. To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn.
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