Summary
- The regional banking crisis has caused even the highest quality financials to crash.
- USB is down 21% in the last three weeks, despite being the largest and considered by some the strongest regional bank in America.
- USB’s business is nothing like high risk regional banks. It’s an A-rated bank with AA-deposit safety.
- USB’s excellent management team is as battle tested as they come, including a CEO that’s been with the bank for 37 years and was CFO during the Great Financial Crisis.
- USB is trading at 7X earnings, a 45% historical discount, and offers a 5.5% very safe yield and nearly 100% upside to fair value. It could deliver 135% returns within three years, and 317% within six years. Long-term 13% risk-adjusted returns make this Buffett bank a table-pounding buy.
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This article was coproduced with Dividend Sensei.
Warren Buffett famously said to be “greedy when others are fearful.” In the last few weeks, we’ve seen the second biggest two-week crash in regional banking history.
A 28% plunge that was only surpassed during the worst days of the Great Financial Crisis.
I’ve been carefully monitoring the financial stress in the financial markets via the St. Louis and Chicago Fed financial stress indexes, which consist of 123 metrics.
I can confirm there’s no financial crisis brewing, yet even the highest quality regional banks have gone off a cliff as if the economy were on fire.
Let me share with you the three reasons why I just recommended U.S. Bancorp (NYSE:USB).
Specifically, when considering the above statement of being “greedy when others are fearful, why this king of regional banks is 45% undervalued and could quadruple in the next six years.
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