This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Large-Cap Bank Stock Buys From Guggenheim

NEW YORK (TheStreet) -- With so many bank stocks showing very strong year-to-date returns, even aggressive bank stock investors may be tempted to pause and take some gains.

Guggenheim Securities analyst Marty Mosby covers large-cap banks, and shared his five top picks with TheStreet, including three "quality banks" and two "that are still in recovery mode," providing an opportunity for investors, because of discounted valuations to tangible book value and to forward earnings estimates.

Here are Mosby's five top picks, ordered by ascending upside potential, based on Monday's closing prices and the analyst's 12-month price targets:

5. Wells Fargo

Shares of Wells Fargo (WFC) closed at $33.50 Monday, returning 23% year-to-date, following a 10% decline during 2011. Based on a quarterly payout of 22 cents, the shares have a dividend yield of 2.63%.

The shares trade for just over twice their tangible book value, accordion to Thomson Reuters Bank Insight, and for nine times the consensus 2013 earnings estimate of $3.68 a share, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $3.28.

According to data supplied by Thomson Reuters Bank Insight, Wells Fargo's quarterly operating returns on average assets have ranged from 1.21% to 1.30% over the past five quarters, putting it near the top for consistent, strong earnings performance among the largest U.S. bank holding companies.

Mosby says that with the completion of Wells Fargo's integration process for Wachovia -- which Wells Fargo acquired at the end of 2008, thus doubling in size -- the company will "take advantage" of the development of their franchise, "as well as the integration expenses going away in the second quarter."

Mosby said in April that "WFC's plan to remove $1.5 billion in quarterly operating expenses throughout 2012 is expected to begin to impact earnings in the second quarter of this year, generating an acceleration in sequential earnings per share growth next quarter," adding that although "one of the biggest concerns about WFC, in our view, has been whether revenues would grow in 2012," the company during the second quarter "increased revenues sequentially by $1 billion, as fee income sources rebounded."

Please see TheStreet's earnings coverage for details on Wells Fargo's second-quarter results.

Mosby's price target for Wells Fargo is $43, and he estimates the company will earn $3.43 a share this year, followed by EPS of $3.84 during 2013. The analyst said that "Over time, if management can replicate the prior era of consistent earnings per share growth, we expect WFC to produce 13% to 18% in annualized total shareholder returns."

Interested in more on Wells Fargo? See TheStreet Ratings' report card for this stock.

1 of 5

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,915.07 -70.54 -0.42%
S&P 500 1,964.68 -8.15 -0.41%
NASDAQ 4,396.2040 -22.83 -0.52%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs