You're watching...
KBW Equity Research Managing Director Fred Cannon on the financial sector stocks investors should consider.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Quickly show you something we talk about -- just mentioned -- some of the -- New York Community Bank.
Community banks.
Regional banks the big banks Fred cabinet of US about Fred -- up KBW.
Is -- guy who has lived and read the financials he is the chief investment strategist and head of research over KVW.
Fret let's look at some of these names but more importantly the big question macro picture.
Will the financials which have performed pretty beautifully -- 2013 so far Greek PM best what they did in 2012 from what you see.
Well finances -- -- things higher and they certainly happen thing about -- -- remember when you're talking about reaching new highs.
We're not even close our BKX average of the large banks 5556.
Today I think.
The peak back in those 2007 period was a 120.
So if used you know so in many ways of financial still look relatively cheap compared to this market and could could well lead the market higher because there.
We got the excel left which is that the spotter financials this one is -- yet another all new a new time highs we see some but let me just get to some of the names -- go big -- Medium and then we'll look at perhaps an insurer because you look at those as well to these are real expertise areas let's pick your favorite big bank right now for 2013.
Well of the one we like the most right now Citi.
-- Corbett spoke today at lunch I think it gave the stock and boost because he's putting in some hard financial -- to achieve -- -- -- -- that's the new CEO let's just let people know that.
Exactly that you see -- so -- first time out.
And it did any -- a good show.
And so I think he's sitting out some financial markets for 2015 is what investors want to hear about Citi.
In many ways given its problems in the past this could be the biggest restructuring story and you know in the decade for financial.
Certainly Citigroup up 33%.
Year over year the.
Absolutely Citi is still -- the cheap cheap on -- it's not even close the book value at and I think if we can hit the target -- talking about even give visibility to that we can go to book value which is still.
55 dollars so we still have a big move there left.
Write your regional -- at the moment tell me what you really like in this area.
Well it's a silly that we we like one under performers today one of the issues.
There were seen -- while some of this activity as you point -- Goldman Sachs is running.
Capital markets activity market sitting on the hi this -- was not great for regional banks to things this flat yield curve is tough on the spread between.
Assets and in liabilities number one and number two mortgage banking income is coming under pressure so a lot of those banks were concerned were concerned about like -- -- are key core.
However we like USB that's our favorite group right now because it's a pretty safe place to play in the in the large bank -- -- That price to earnings ratio is I believe about ten and that's another one that's done really well up 20% for USB up your life insurance -- This is an interesting pick because again when you're looking at what -- cheap specifically let's get a shot up to the KP WT follows.
You're looking at the -- the banks.
The mortgage guys.
Which name in this particular space do you like right now.
In the life -- I would like Lincoln I think the reason is we actually like the -- space right now because it hasn't participated.
Did the same degree that the banks have in this rally they still remain cheap.
And there's a lot of compelling business reasons and not earning estimates haven't come down.
The challenge you haven't met and crew which of the big names in the space is that.
They still have regulatory overhang because of what could come -- from the -- federal government so we like to go a little bit smaller maybe play a -- and right here.
Do you worry about too big to fail anymore or do you feel that that problem has been solved or is it ever -- -- For the company is that as an unsolved problems for the stocks it may not be what I mean by that is.
For the companies are still going to be a lot of pressure to deal with -- too big to fail.
This could it evolved into a period time when those banks shrink.
Or they break them up while for the company's that's going to be very painful for the stocks that might not be so because when you start breaking them up even at today's value you could realize more value for shareholders.
Bret thank you so much for taking time out of your day we do appreciate it up pretty positive picture about the banks from Fred cannon of KPW Keith.
Gloria what's.
Thank you very much now what.
