5 Best Stocks Under $50

2. Wells Fargo & Company (NYSE:WFC)

Share Price as of July 21, 2022:  $43.34

Number of Hedge Fund Holders: 93

Wells Fargo & Company (NYSE:WFC) is a financial services company that was formed in 1852 and is headquartered in San Francisco, California, United States. It offers a host of services such as investment, mortgage finance, commercial finance, and other banking services.

Basic, yet crucial financial metrics, such as return on tangible share holder equity (ROTCE) and net interest income (NII) paint a bright picture for Wells Fargo & Company (NYSE:WFC)’s future. The company is expected to have an ROTCE of 10% and grow it to 15% over the next couple of years and its NII is slated to grow by an equally impressive 20%.

Like other banks, Wells Fargo & Company (NYSE:WFC)’s fee income dropped in its latest quarter, which made Barclays reduce its share price target to $58 from $64 in July 2022, along with maintaining an Overweight rating. By the end of Q1 2022, 93 of the 912 hedge funds in Insider Monkey’s database had invested in the bank. Wells Fargo & Company (NYSE:WFC) also pays out a 25 cent quarterly dividend per share for a 2.29% dividend yield.

Patrick Degorce’s Theleme Partners is Wells Fargo & Company (NYSE:WFC)’s largest investor. It holds an $884 million stake that comes through 18 million shares.

Wells Fargo & Company (NYSE:WFC) made an appearance in Davis Funds’s  Q4 2021 investor letter, with the fund stating that:

“The absolute level of revenues and profits generated by such companies is in fact so large that most of the major financial holdings in the portfolio produce enough annual operating income individually that a number of them could, in theory, purchase several entire businesses among hundreds of choices within the S&P 1500 Index, using just a year’s cash earnings without dipping into capital. This is theoretical, as financial companies would not be in the business of buying healthcare or technology companies, for example, but we point out these facts to illustrate the sheer scale of the economics produced by single financial companies in a given year, which is often a multiple of the cash earnings yielded by companies in a host of other industries.

Given this cash-generation power, we are naturally drawn to what we believe are strong and profitable financial institutions when the price is right. Presently, we believe the valuations of our financial holdings are not only reasonable, but extremely compelling, and our portfolio composition reflects this view. Representative financial holdings in the Fund includes Wells Fargo.”