Bank Stock Taking on New Life

Wells Fargo & Co. (NYSE:WFC) — We included Wells Fargo in our Top Stocks to Buy for December when the stock was trading at $23.51 saying, “At just 11 times earnings, the stock should sell at $32 since it has commanded a higher multiple in the past.”

In late June, we recommended taking profits and went negative on the stock. But now the stock has taken on new life as volume builds, and it appears capable of breaking from a long-standing top at $35.

Though considered a “regional bank,” its assets total over $1.34 trillion and it is the fourth largest bank in the United States. Analysts look for an increase in earnings in 2013 to $3.67 from $3.32 this year. At a projected 11 times earnings, the fundamental target is $40, which matches a target resulting from the breakout of a cup-and-handle formation that has been forming since March. Buy WFC at the market with a target of $40.

Trade of the Day – Wells Fargo & Co. (NYSE:WFC)
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Trade of the Day Chart Key

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