We tend to keep a very close eye on the brokerage firm calls that we cover here at 24/7 Wall St., especially when they make a definitive market direction call. The reason is that it takes guts and more than a little guile, to actually draw a line in the proverbial sand and make that kind of call. One of the firms we follow has made bullish calls, and it has been spot on in its analysis.
In another new report from Robert Sluymer and his outstanding team at RBC, they make the case that history tells us that steep declines in secular bull markets like we have seen twice in the past year are shallow and the rebounds are often very powerful and sustained. They also note that while we may be overbought now, and volatility is low, a short-term or near-term pullback would not surprise them.
Four top Wall Street banks are looking better to the RBC team, and all have posted solid second-quarter results.
Bank of America
The company posted very solid second-quarter results, and the overall trend for the company looks better. Bank of America Corp. (NYSE: BAC) is a ubiquitous presence in the United States, providing various banking and financial products and services for individual consumers, small and middle market businesses, institutional investors, corporations and governments in the United States and internationally. It operates 5,100 banking centers, 16,300 ATMs, call centers, online and mobile banking platform.
The company is one of the larger lenders to the oil and gas industry, and it told analysts earlier this year that it had set aside more money for coverage of loans to the industry that may go bad. Overall credit quality remained strong, while consumer portfolios continued to improve and commercial portfolios remained stable with energy improving. The equity and debt trading at the firm helped boost the second-quarter results, while low interest rates still remain a drag.
Bank of America investors are paid a small 1.4% dividend. The Wall Street consensus price target for the stock is $17.07. The shares closed most recently at $14.40 apiece.
This top bank stock is still down over 20% from highs that were posted last summer, but the bank also came in with very solid second-quarter results. Citigroup Inc. (NYSE: C) has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. It provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management.
Trading at a very cheap 9.4 times estimated 2016 earnings, this stock looks very reasonable in what is becoming a pricey stock market. A continuing stock buyback program at the bank is a positive. The company’s institutional clients group appeared to be holding its ground last quarter. While investment banking revenue was down in an unsure macro environment, trading revenue remained strong, up 2% from last year.
Citigroup investors are paid a tiny 0.45% dividend. The consensus price objective is posted at $54.41. The stock closed most recently at $44.47 per share.