Large Cap Banks Highlight Jefferies Top Post-Brexit Buy List

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JPMorgan

This stock trades at a very low 10.6 times estimated 2016 forward earnings. JPMorgan Chase & Co. (NYSE: JPM) is expected to benefit from commercial loan growth and an upturn in capital spending. Wall Street analysts agree that the stock seems attractively valued on estimated price-to-earnings and a very solid price-to-book value. Some on Wall Street have cautioned that last year’s divestiture of the physical commodities business could provide an earnings headwind throughout this year.

Improvement in loan growth, slow but improving equity capital markets, and a steady increase in deposits will be a solid plus. Trading at a discount to many of the large cap banks on 2016 earnings estimates helps upside potential as well. With $2.6 trillion in assets on a worldwide basis, and one of Wall Street’s savviest leaders in Jamie Dimon, the stock is a solid buy for investors.

Dimon put his money where his mouth was earlier this year and reportedly bought a stunning 500,000 shares of the stock for a massive $26 million. That brought his total holdings in the bank to 6.7 million shares, worth over $360 million.

Investors are paid a solid 3.2% dividend. The Jefferies price target is set at $67, and the consensus target is $70.73. The shares closed Wednesday at $60.19

Wells Fargo

This large cap bank is a stock for investors to look at now for safety, dividends and solid upside potential. Wells Fargo & Co. (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.8 trillion in assets. The company provides banking, insurance, investments, mortgage and consumer and commercial finance through 8,700 locations, 12,800 ATMs, the Internet and mobile banking. It also has offices in 36 countries to support customers who conduct business in the global economy. Wells Fargo serves one in three households in the United States.

Wells Fargo has slowly, but surely, become one of the biggest mortgage lending companies in the United States, in addition to its normal banking and brokerage businesses. A continued increase in commercial real estate lending could really boost the bank’s bottom line and overall revenue. The stock also remains a top Warren Buffett holding, and he raised his holdings in the bank to 10% on the stock’s weakness earlier this year.

Wells Fargo shareholders receive a solid 3.26% dividend. The $57 Jefferies price target compares to the consensus target of $54.69 and the most recently closing share price of $46.65.

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All these top stocks to buy had been weak to some degree, even before the Brexit selling, so they are offering investors outstanding entry points at current levels. While volatility could remain elevated as the political cycle continues to roll along, many stocks remain on sale now.