Wells Fargo: 3 New Reasons To Buy Today
The CEOs of the nation’s most powerful banks met with the Fed on Wednesday to go over results from recent stress tests. As a result, all eyes are on the financial sector.
Often, stocks in the financial sector move in tandem. When markets are shooting up from the bowels of recession, or are recovering from a recent dip, the financial sector often leads the charge. Such was the case in 2009 when hedge fund titan David Tepper piled into financial stocks to reap profits of $7 billion. The financials also led the recent resurgence of the S&P 500, beginning in late 2011 until now.
However, financials are also hit very hard during downturns. When markets seize up, banks often have to tighten credit, limiting their profits. Also, investors often buy up treasuries during sagging markets, which depress interest rates. Coupled with a decline in interest rates from the Fed, these characteristics hit banks hard. As such, they can be volatile investments during market peaks and at the apex of boom cycles.
But how can you play the financial sector when markets are topsy-turvy, neither booming from a low nor free falling from a high? The answer is good old-fashioned critical thinking and research.
Below is an evaluation for financial firm Wells Fargo-an often overlooked security compared to its Wall Street counterparts.
Wells Fargo (WFC), which traded around the $33 mark Friday, is a strong company.To continue reading, click here.