U.S. Bancorp (NYSE:USB) — This midwest bank is the fifth-largest bank by assets in the United States, with assets of about $438 billion. It has a solid record of earnings growth, with earnings rising each year since 2011 to a Standard & Poor’s estimate of $3.28 this year up from $3.16 in 2015.
S&P further estimates that loans held for investment grew 5.5%, which is about the same as last year, and an increase by the Federal Reserve in interest rates should help USB keep its net interest margin stable.
Credit quality remains high with low loan losses, which are expected to fall 4.2% from last year.
Falling energy prices have been a problem for many banks, but USB stock has a loan exposure of just 1.2% to energy, and its overall high loan credit quality is excellent vs. its peers. The bank pays a dividend of $1.12 for a yield of about 2.6%.
U.S. Bancorp reported Q2 earnings of 83 cents vs. the Capital IQ estimate of 80 cents.
Technically, USB is in a bull market, recently breaking through a bearish resistance line at about $43 that is drawn from an August 2015 high at $46. The breakout carried the stock to over $44, followed by a retracement to $42-plus where it flashed three CBR Buy signals, jumped through the 50-day moving average at $43 and advanced to $44 again.
Volume increased sharply during the breakout, and the MACD indicator flashed a new buy signal last week.
Buy USB stock at $43 with a target of $50 within 90 days. Long-term investors: Note the Golden Cross buy signal in August, indicating a long-term change in trend has occurred.