Strategists: Four Big Banks We Like

Financial stocks have been higher this week—so how will the sector be affected by new regulation and the Fed’s exit strategy? Chris Mutascio, managing director and bank analyst at Stifel Nicolaus and Fred Cannon, co-director of research and chief equity strategist at KBW discussed their sector outlooks.




The financial reform overhang is creating a positive opportunity for some of the higher quality large banks right now,” Mutascio told CNBC. “We think there’s going to be more bark than bite and that creates an opportunity to trade up from lower quality to high quality right now at pretty.
reasonable valuations.”

Mutascio likes Wells Fargo [WFC 31.49 0.63 (+2.04%) ] and Bank of America [BAC 18.11 0.54 (+3.07%) ].

In the meantime, Cannon agreed that the large banks are still the place for investors to be. He has “buy” ratings on JPMorgan [JPM 45.50 0.56 (+1.25%) ], Bank of America, and UBS [UBS 15.29 --- UNCH (0) ]. However, he advised investors against Citigroup [C 4.285 0.135 (+3.25%) ].

“When you talk about normalized earnings, it looks like a long way away in the future for Citi,” he explained. “They’ve got a long workout ahead of them and we think right now, go to the names that can producing good earnings and capital momentum next year.”

In addition, Cannon said some of the regionals that are actively buying up the failed banks will also perform well.