Bank of America provides various banking and financial products to over 57 million consumers and businesses in the United States. They offer their services in over 40 others countries as well. They are the largest wealth management corporation in the world, and they gained this title after acquiring Merrill Lynch in 2008. As of 2012, they are the 13th largest corporation in the United States. Their stock plummeted over 60% in 2011 and has been on the rise since the start of 2012. They reported annual earnings per share of $0.25 in January and are expected to bring in $1.00 in 2013. This is incredible growth, so if they can make it happen they are set to soar.
Citigroup’s holdings include over 200 million customer accounts in 160 countries, making them a worldwide powerhouse. Citi is the 20th largest corporation in the U.S. and provides a broad range of financial products and services, which are very similar to the other banks in the Big 4. They are down a horrible 84% since their high in 2008, before the financial crisis, making them the worst performer of the group. This also means they potentially have the largest amount of room to run over the next few years. Citigroup had the smallest earnings growth in 2012, coming in at just 6.3%. However, analysts see a strong growth of 19.9% in 2013.
2013-2015 Projections
Strong earnings growth is expected of Wells Fargo over the next several years. Analysts project earnings per share of around $3.65 in 2013, an 8.3% growth from 2012. They are then projected to grow another 6.6% in 2014 and 6.2% in 2015. These are only the current estimates, and I believe they are much too low. In fact, Wells Fargo has increased quarterly earnings year-over-year for 10 consecutive quarters, dating back to the third quarter in 2010.
The Dividend
Management raised Wells Fargo’s dividend by 14% in January, bringing it to $0.25 quarterly. This represents a yield of 2.85%, which makes them the highest yielder of the Big 4. JPMorgan comes close with a healthy 2.5% yield, while Bank of America and Citigroup are under 0.40%. Wells Fargo’s dividend has been on the rise since 2010, and with consistent growth in earnings, it should continue to increase.
The Foolish Bottom Line
There is huge opportunity in the financial industry, and Wells Fargo is my top play. JPMorgan Chase is my second best bet, followed by Bank of America and Citigroup. With banks being the primary reason for the financial crisis and recession, they still have the most to prove and trust to gain. I believe Wells Fargo will continue to grow and return value to its investors. In fact, after writing this article, I was so convinced it was going higher that I bought shares in this company myself. This stock is a strong buy.
The article This Big Bank is Just Too Cheap originally appeared on Fool.com and is written by Joseph Solitro.
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