We’ve been following money-center giant Wells Fargo ($WFC) pretty closely this year. I’ve taken a personal interesting in seeing just how far it can really go.
While I’ve always considered the Wells Fargo to be the safest name among the “big four” with JPMorgan Chase ($JPM), Bank of America ($BAC) and Citigroup ($C), Wells Fargo has shown no immunity against a tough interest rate environment and weak loan growth.
Even so, unlike some of its rivals, what I’ve noticed is that, despite the bank’s sluggishness in mortgage lending and an overall weakness in loan demand, Wells Fargo’s management has made no excuses. Instead, it has consistently raised the bar — adding pressure on the bank’s ability to perform better. Investors have responded by aligning their trust with the banks direction. It’s turned out to be a smart move.
On Jan. 9, I issued a $40 price target on the stock. This was while shares traded at around $34 per share. Admittedly, it wasn’t a huge gamble. But considering that we were all just slowly backing away from the “fiscal cliff,” it didn’t make sense for me to then go too far out on another limb. Not surprisingly, shares would hit my $40 mark four months later.