Why U.S. Bancorp Shares Will Fly Above $50
While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.
What: Shares of US Bancorp traded flat today after Nomura Securities initiated coverage on the banking giant with a buy rating.
So what: Along with the bullish call, analyst Bill Carcache planted a price target of $51 on the stock, representing about 26% worth of upside to yesterday's close. So while contrarian traders might be turned off by US Bancorp's price strength over the past year, Carcache's call could reflect a sense on Wall Street that the bank's growth tailwinds give it plenty of room to run.
Now what: According to Nomura, US Bancorp's risk/reward trade-off is rather attractive at this point. "Best-in-class operating efficiency, industry-leading fee income generation, and low levels of excess capital drive USB's 20%-plus returns, which we view as repeatable and sustainable," said Carcache. "Overall, we see upside to 2015 estimates and expect the shares to continue to grind their way higher in the coming quarters." With US Bancorp shares trading at a clear price-to-book premium to the banking sector, however, I'd hold out for a wider margin of safety before betting on that bullishness.
Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.
The article Why U.S. Bancorp Shares Will Fly Above $50 originally appeared on Fool.com.Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.