Monday, May 7, 2012

" The financial moguls love to buy up Philly banks, that is why it is time to add some PNC Bank to your portfolio"

Dow Jones Industrial Average  13038.27 (Down and ugly)  Week ending 05-04-2012

Well , Philly was in the Wall Street Journal this week on the front page on Thursday May 3rd, in an article by Brad Reagan. The headline read like this:

"For D.C. Baseball Team, Deluge of Phillies Fans is National Disgrace" "Washington tries to keep out the Phanatics with the Ticket Rules; Poking the Hornet's Nest". 

"Well there are certain sections of Philly, Major Strasser, that I wouldn't advice you on trying to invade"
It seems that the Phillies fans are willing to follow their team no matter where they are playing. One fan even brought a sign that said "Welcome to Citizens Bank Park South".  I even saw "Occupy  Nationals Park" T-shirts on TV.  To Washington fans I have three words: "Get over it". We have always had Mets fans here at the "Citizens Bank" and "Veterans Stadium" parks and as fans we enjoy the banter with them about the merits and the faults of each baseball team. That is the fun of baseball,  always discussing and debating about the nuances of the game and why our team is best. 

Now on to the business at hand. PNC Financial Services Group Inc. (Symbol PNC, $66.05) at some point will get bought out. It is inevitable, because that is what always happens here in the Philadelphia area to our banks. PNB, CoreStates Financial Corp., Commerce Bank, PSFS, Mellon Bank, Willow Grove Bank, Girard Bank,  Sovereign bank, Home Unity Savings, First Pennsylvania, Hamilton Bank , and the list goes on.  

PNC,  looks really solid here. 2012 earnings are looking like $6.18 per share and 2013 earnings are projected at $6.84 per share. That is a forward Price Earnings ratio of 10.49. The stock pays a dividend yield of 2.42 %. There are also 15 buy recommendations on the stock.

The company has 5 year sales growth of 10.68%. Net Profit margins are 19.19% . 

 One year Total return on PNC stock has been 7.67 %. If you kick in the dividend yield of 2.42% , that brings you to 10.09% return overall, not bad. The 3 year total return however is 45.71% , now we are talking real money.  I would suspect that a JP Morgan Chase or a Wells Fargo would be well matched for a merger with PNC.  Buy it now, and wait for the fun to start happening.

If you want to go little further west to find your bank investment you might look to the hometown of the Minnesota Twins. 

U.S. Bancorp (Symbol USB, $31.84) would be my choice for the Mid-West bank in Minneapolis MN. , if you are looking to heading out that way with your investment to get away from all the bantering here. Similar numbers here, 2012 earnings per share of $2.76 and 2013 of $3.00 per share.USB  pays a dividend yielding 2.45% and has a Net Profit margins of 23.67% .  PEG on the stock (Price/earnings-to-growth ratio) is a very reasonable 1.17. 

Three Year Total Return are Rod Carew type numbers, of 78.48%.  I guess I am dating myself back to the bygone days of Twins baseball. I think Warren Buffett and Charlie Munger may have looked over this balance sheet once or twice. It seems they own 69 Million shares of USB. ...... I guess they don't get out east much. Although Warren was seen in a Diner in Iowa this morning with Becky Quick of CNBC.  I guess that is somewhat east of Nebraska

Well it is time for the 7th Inning stretch. I guess I'll get a hotdog and a cold brew and cheer for my Phillies to whoop up on those Bernie Madoff invested,  New York Mets.  Had to take a shot at them too! That's the NL East.

Well see you at the World Series,


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