Wells Fargo (NYSE: WFC)--Long
Current Price: $30.25 Target Price: $40.00
Source: Hedge Fund. Atlanta, GA.
Quick Pitch: With the integration of Wachovia to be fully complete by the end of the first quarter in 2012 and the U.S. economy plodding steadily along—albeit at a rate lower than which we had become accustomed during the mid-2000s—Wells Fargo will start to show its true earnings potential. Also, the U.S. government will likely give more leeway to Wells (and other strong banks) in regards to its management of capital, which will allow the bank to raise its dividend and repurchase shares with its excess capital. We do not know exactly when this will happen but we do know that this scenario will happen. And when this does start to happen, the marketplace will bid up the price of shares and attach a higher multiple to the stock in terms of P/E and P/B.