NEW YORK (Real Money) -- What does it say that Wells Fargo (WFC) shares finished higher Tuesday? What does it say for the bank group when a company that barely made the earnings estimates, and barely met on revenue, actually finishes higher?
I think it says that this is a group that people really want to own this year. It says that the group hasn't advanced so far as to make people worrisome, and that when the smoke clears there are more positives than negatives, and that the group is investable.
The Action Alerts PLUS charitable trust owned Wells for a long time. We chose to move on to those banks that are less leveraged to the mortgage market. But one thing was for certain during this period: As sure as the sun would come up, Wells would miss the quarter. As great as the franchise is, it has simply failed to blow out the quarter since the Great Recession began.
Now, I know and understand that it made all of the sense in the world for Wells to take market share when it was able, even if it meant taking share by buying Wachovia and Golden West -- two companies with much lower loan standards than those of Wells. I also understand that Wells has been a remarkable ameliorator of bad loans. The firm is so good at it, in fact, that I wish the government would just turn over the whole housing problem -- or what is left of it -- to Wells.
But the simple fact is that Wells Fargo stock, even after having gone down like clockwork, has rallied back in a few weeks' time, again in clockwork fashion.
In other words, the stock doesn't have to rally back from a hole after each quarterly report -- quarters that are very similar to the previous "disappointing" quarters. This tells you that the group has more legs than what we might have thought. I think the strength here is a tell: The money wants to go to what hasn't advanced.
Remember, Wells is very different from JPMorgan Chase (JPM). The latter got a very nice target boost today from Bank of America Merrill Lynch because of a bottoming in net interest income, and a refocusing on earnings power, away from legal issues.
Wells is chiefly a home lender, and its stock was supposed to be as decimated after the Federal Reserve started tapering stimulus.
There are many more bank earnings coming. Just remember: When you get a not-so-hot one like Wells, don't panic. Things just might right themselves much more quickly than you would think.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long JPMorgan Chase.
Editor's Note: This article was originally published at 6:07 a.m. EST on Real Money on Jan. 15.