price stock

Wells Fargo & Co. (NYSE:WFC) has historically been regarded as one of the highest quality U.S. financial institutions. However, in September 2016, it was reported that Wells Fargo allegedly opened or applied for more than 2 million bank accounts and credit cards without customers knowledge or permission. While financial markets are generally efficient, I believe the Wells Fargo account scandal may be distracting investors from taking advantage of a great opportunity as we move into 2018. As many market participants continue to focus on potential legal ramifications, the credit quality of Wells loan book remains pristine, and the company remains overcapitalized from a capital ratio perspective, potentially allowing the company to return more than 100% of annual earnings to investors for the foreseeable future.

The credit quality of Wells loan book remains pristine, as net charge-off ratios continue to remain historically low. Net charge-off rates have improved significantly from their 2009-2010 peak at nearly 2.5% on a quarterly basis. Currently, the industry average is 0.51%, yet Wells Fargo reported third quarter net charge-off of only 0.30%, which is well below average, according to Bloomberg and Wells Fargo investor relations presentations. Additionally, over the past 12 months, Wells nonperforming assets (NPAs) have declined from $12.0 billion to $9.3 billion. As net charge-offs and NPAs remain low, it allows Wells Fargo to reduce its provision expense. These reduced expenses flow straight to the bottom line of the companys profitability, increase profit margins, and improve the companys free cash flow. Given this trend, I expect Wells Fargo to be able to continue to maintain low loan provision expenses going forward, which is a positive catalyst for future earnings growth.

price stock: Apache Corporation(APA)

Advisors’ Opinion:

  • [By Lee Jackson]

    These companies also reported insider buying last week: Apache Corp. (NYSE: APA), Halliburton Co. (NYSE: HAL), Revlon Inc. (NYSE: REV), Valeant Pharmaceuticals International Inc. (NYSE: VRX) and U.S. Steel Corp. (NYSE: X).

  • [By WWW.THESTREET.COM]

    Cramer and the AAP team say news and caution are weighing on energy and health-care sectors. Find out what they’re telling their investment club members about Apache (APA) , Cimarex (XEC) , Arconic (ARNC) and Allergan (AGN) with a free trial subscription to Action Alerts PLUS.

  • [By WWW.THESTREET.COM]

    Cramer and the AAP team say Apache’s (APA) mixed results are a buying opportunity. Find out what they’re telling their investment club members with a free trial subscription to Action Alerts PLUS.

  • [By WWW.THESTREET.COM]

    Cramer and Jack Mohr think Apache’s (APA) management has positioned the company for growth through both innovation and efficiency. Read what they are telling their investment club members with a free subscription to Action Alerts PLUS.

price stock: Cott Corporation(COT)

Advisors’ Opinion:

  • [By Dan Moskowitz]

    Cott (NYSE: COT  ) produces and sells over 200 different types of beverages in over 50 countries, and it implements a highly effective strategy. Cott is what is known as a Fast Follower, which makes it unique to other beverage companies.

price stock: Cresud S.A.C.I.F. y A.(CRESY)

Advisors’ Opinion:

  • [By Cameron Swinehart]

    Cresud (CRESY) –

    An Argentinean based agriculture company that currently owns roughly 2.4 million acres of farmland in Argentina, Brazil, Paraguay and Bolivia. CRESY produces a variety of crops consisting of soybeans, corn, and sugarcane. It also has operations in beef cattle and milk production. In the second quarter, Cresud sold 4 of its farms for roughly $60.5 million and saw large gains in its farmland development business. CRESY is currently trading down roughly 60% from its highs back in late 2010. Many farming companies have struggled to release value for shareholders with the drop in crop prices but now many are beginning to see value with the sale of farmland.

price stock: Lucas Energy, Inc.(LEI)

Advisors’ Opinion:

  • [By Garrett Baldwin]

    The Interior Department is in charge of managing regulations around oil and gas drilling around the nation. Currently, the favorite appears to be Forrest Lucas, the 74-year-old founder of Lucas Energy Inc. (NYSEMKT: LEI). A career energy executive, Lucas recently told Investors Business Daily that he would be interested in the job because “it’s a very important position and you need to have someone in there who knows what they’re doing.” However, Lucas has never actually met Trump in person.

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