Bank of America Corp (BAC): Banking Equities Might Crash, The Details

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The most noteworthy takeaway from this quick snapshot may be how seemingly underappreciated Wells Fargo is. The bank boasts the strongest return on assets but is fourth cheapest on a price-to-tangible book value basis.

Sign of strength or weakness?
So often, investors take too narrow of a view when determining relative value. If one solely looks at large U.S. banks, it’s reasonable to assume that Wells Fargo is “expensive.” But why should Wells Fargo be lumped into the same category as bank stocks that move primarily on news of recent legal settlements and cost-cutting initiatives, instead of being compared with other banks with a strong track-record of operational success?

The vast discrepancy in valuation between Wells Fargo & Co (NYSE:WFC) the largest Australian and Canadian banks may signal Wells Fargo’s tremendous upside or the foreign bank stocks’ significant downside. The answer is not clear or absolute. But it would stand to reason that those investing on the side of Wells Fargo may be able to rest easier at night than those invested internationally in an industry that has shown the ability to deteriorate quickly when expectations get out of whack and panic rears its ugly head.

The article Bank Stocks Could Crash Again — Just Not the Ones You Think originally appeared on Fool.com.

David Hanson has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo and owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo.

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