That said, these stocks are way too cheap if you think, as I do, that housing is just starting to come back.
The banks have a lot going for them right now. First, even though they have had a run, they are still disliked. Second, the feds are losing focus on them. The big investigations are winding down. Third, they are, at last, going be annualizing easier net interest margin comparables. Fourth, they are soon going to be able to return as much capital as they want as the Federal Reserve, too, is losing interest in reining them in.
All of these are wind at your back stories.
We are huge holders of Wells Fargo (WFC), Warren Buffett's bank, for the charitable trust (Action Alerts PLUS). I know the stock's had a good move off the bottom and has almost a $300 billion market cap. But the darned thing sells at just 14 times earnings and has a 2.68% yield. John Stumpf, the CEO, is one of the most impressive leaders out there. The company dominates a third of the country and is just now fully integrated to do its tremendous cross-selling. Its bad loans have come down dramatically.
You want to sell that? You want to sell Warren Buffett's favorite position?
Nope, you want to buy it. Right here. It's a fabulous bet on higher rates. It's an amazing bet on mortgages and more housing starts and household formation.
I would use any weakness to scoop some up, including the very weakness we have today.
Editor's Note: This article was originally published at 12:40 p.m. on Real Money on May 20.