Boston, MA, 03/20/2014 – Wells Fargo & Co (NYSE:WFC) was in trouble during the financial crisis of 2008 like just like other financial institutions. But now, it’s bounced back and is poised to deliver good growth and returns to investors.
Wells Fargo has less litigation-related troubles in comparison to its peers who together constitute the ‘Big Four’ of U.S. banking — JP Morgan Chase & Co (NYSE:JPM), Citigroup Inc (NYSE:C), and Bank of America Corp (NYSE:BAC).
The stock has risen by nearly 30% in the past one year and this upward trend is likely to continue. In fact, Wells Fargo has consistently outperformed the S&P 500 over the long term. It pays good dividends and has fundamentals with loan-to-deposit ratio of about 84%.
It Only Gets Better
Things are looking up on the broader economic front and this bodes well for the banking sector. The quality of its loan portfolio has increased which explains why it has been making lower provisions for anticipated losses.
The bank’s loan portfolio has expanded by 4% in 2013 and is expected to grow by 6% in 2014. The improvement in the housing market should benefit Wells Fargo. Wells Fargo’s confidence in itself and in the economy is demonstrated their recent decision to lower the bar for certain government-backed mortgages. This decision should help strengthen Wells Fargo’s position as the leader in the housing mortgage sector and will also give it a first-mover advantage and help it acquire some high quality mortgage customers.
If Warren Buffett Likes The Stock
One of those who believe in Wells Fargo is the Oracle from Omaha. After starting his stock purchases of Wells Fargo in 1989, Mr. Buffett now owns 9% of the company’s stock. His holding in Wells Fargo is worth even more than his favorite stock, Coca-Cola Company (NYSE:KO).