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How to Make Coin on JPMorgan and Wells Fargo Into Earnings

NEW YORK (TheStreet) -- JPMorgan Chase (JPM - Get Report) and Wells Fargo (WFC - Get Report) report earnings Friday and they face unique headwinds into the summer months. I'm extremely bullish with one while more or less neutral with the other and I'll explain why. I also like Citigroup (C).

Wells Fargo is a diversified financial services company providing banking, insurance, investments, mortgage and consumer finance services across North America as well as internationally.

52 Week Range: $36.19 to $50.49

Book Value: $29.50

Price To Book: 1.7

WFC Chart

Investors are looking forward to improving first-quarter earnings before the market opens on Friday. The consensus opinion is presently (subject to change) 96 cents a share, a progression of 4 cents (4.34%) from 92 cents during the corresponding period last year. The lowest analyst estimate this report is 90 cents per share, and the highest is $1.02 per share.

I believe Wells Fargo will beat the consensus and report at least 2 cents above consensus. 

Analyst opinion is mixed with this company. Most of the analysts surveyed don't believe a buy or a sell is currently warranted. Right now, Wells Fargo has 13 buy recommendations out of 34 analysts covering the company, 19 holds, and two recommend selling.

I last examined earnings expectations for this pair in July. At the time, I was also following up with Wells Fargo because it was one of my five dividend picks for 2013. Wells Fargo was trading for about $42. After an adverse appellate court decision, I updated my bull thesis and this success story is far from over.

I bank at USBancorp (USB) and Wells Fargo and as crazy as it may sound, I don't mind taking a trip to either location. Wells Fargo usually greets me at the door, every request is hassle free, and the staff treats you like your time is valuable.

The bank understands that delivering outstanding service cost less than marketing, and the stock charts say it all. In fact, Wells Fargo reached a new all-time high last week. Despite Well Fargo's soaring stock price, the bank continues to attract value buyers, and will continue to do so.

Wells Fargo's forward price-to-earnings multiple is a head-scratching 11.4 and should expand closer to 14 as the economy improves. New 52-week highs almost weekly is making shareholders rich, but the oversized dividend is making them wealthy.

Shareholders receive $1.2 annually in dividend payments. The yield based on a recent price is 2.4%.

Short-sellers are not interested in betting against this one. Short interest is a non-factor at a rate of 0.7% of the float. In my opinion, there's little else to know beyond the micro-sized short interest. A short interest less than 1% is the equivalent to a stamp of approval by short sellers that you're as safe as you're going to be in the market.

WFC Revenue (Quarterly) Chart

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