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5 Banks to Consider as Options Plays

WFC Chart WFC data by YCharts

Wells Fargo (WFC - Get Report)

Book Value: $28.07

Over 70% of analysts rate Wells Fargo a buy or strong buy and the average price target is $38.64. If you really want a full appreciation of the differences between Wells Fargo and other banks, set your chart for monthly bars and compare the various banks. Wells Fargo and USBancorp (USB) are the two major banks that have more or less sidestepped the financial crisis. Sure, they both became "collateral damage" during the plunge in 2009, nevertheless, they quickly recovered.

The Wells Fargo chart more closely resembles the SPY than the other stock charts listed here. Take a look and review the relative start, mid-chart pattern and relative ending prices and Wells Fargo more or less mirrors the overall market.

WFC Chart WFC data by YCharts

Wells Fargo has a bullish technical chart pattern based on the 60- and 200-day moving averages, both averages are steadily climbing a wall of worry to higher profits. Trend followers love this pattern and will hold a position until a technical break results in a signal to exit.

Wells Fargo is attractive fundamentally also. The trailing 12 month price-to-earnings ratio is 11.3, and analysts estimate $3.32 per share in earnings this year.

The company currently pays 88 cents per share in dividends for a yield of 2.58%. Wells Fargo doesn't pay the highest dividend yield in this group, but if you're willing to forego a small amount of yield for safety, Well Fargo offers a compelling argument in this space.

Short sellers are next to impossible to find. Short interest is so low I only include it to demonstrate the smart money is not betting against this company: 0.8% of the float is short based on the last reported numbers.
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SPY $205.92 0.46%
BAC $14.10 0.36%
C $44.41 0.41%
JPM $61.60 0.59%
WFC $49.03 0.14%


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