NEW BULLISH Plays
Wells Fargo & Co - WFC - close: 55.91 change: +0.18
Stop Loss: 53.25
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Entry on March -- at $---.--
Listed on March 17, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 15.8 million
New Positions: Yes, see below
Why We Like It:
Banks had a rough start to the year but one stock leading the pack is WFC. Shares of WFC are up about +2% in 2015 versus a virtually flat financial sector.
According to the company, "Wells Fargo & Company (WFC) is a nationwide, diversified, community-based financial services company with $1.7 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,700 locations, 12,500 ATMs, and the internet (wellsfargo.com), and has offices in 36 countries to support customers who conduct business in the global economy. With approximately 265,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 29 on Fortuneâ€™s 2014 rankings of Americaâ€™s largest corporations."
WFC is very shareholder friendly. Back in 2014 the company said they wanted to pay out 55% to 75% of their net income to shareholders, which was a +34% jump from the prior year. This year WFC's CFO John Shrewsberry said they would like to distribute 50% to 70% of net income through dividends and stock buy backs. The amount of money they can pay in dividends is regulated by the Federal Reserve but WFC has raised their dividend six times in the last five years.
The Fed's annual bank stress test is a big deal and this was just completed a week ago. WFC passed the Fed's very severe stress test. The bank has asked permission to raise their dividend +7% to $0.375 a share (up from $0.35).
WFC's consistent dividend might be a reason the stock is one of Warren Buffet's biggest holdings in Berkshire Hathaway.
Some have suggested that WFC could be a way to play the improving U.S. economy and consumer spending. That is because WFC is the biggest residential lender and largest auto lender in America.
The stock's rally has produced a buy signal on the point & figure chart that is forecasting a long-term target of $74.00. Currently the stock is hovering just below resistance at the $56.00 level. We are suggesting a trigger to open bullish positions at $56.15.
Trigger @ $56.15
- Suggested Positions -
Buy WFC stock @ (trigger)
- (or for more adventurous traders, try this option) -
Buy the MAY $55 CALL (WFC150515C55) current ask $1.97
Option Format: symbol-year-month-day-call-strike