Bank stocks offer attractive valuations, investor says
The clouds over bank stocks aren’t expected to clear anytime soon, fund manager Dave Ellison said, but some names remain attractive based on valuation.
“The bull case is that you’ll make money when things are terrible. The bear case is the business sucks and no one knows how bad it will be,” Ellison said. Larger, more diversified banks are performing relatively well in this environment because a larger proportion of their profits comes from noninterest income such as fees on loans, credit-card fees and trading revenue. But the big banks are also facing a dearth of Wall Street deal making such as initial public offerings and mergers.“Everyone loves JPMorgan — they have diversified revenue streams and good control of their deposits, but is the stock going to triple? No.
Smaller banks are facing the emergence of a two-tiered financial system, with big, diversified banks taking deposits away from smaller organizations.
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