There’s plenty of quality names that are now on sale in the “financial” space, says Oakmark Funds’ portfolio manager. XLF, at present, is down 20% from its year-to-date high.
Nygren’s bull case for Ally Financial stock
One name in particular that pops out to Bill Nygren is the Detroit-headquartered bank holding company, Ally Financial Inc (NYSE: ALLY). This morning on CNBC’s “Squawk on the Street”, he said:
It’s our largest financial holding. Ally Financial sells for a little under $40 a share right now. They are supposed to make about $8.0 per share this year. They also pay a dividend that is higher than the 30-year bond yield.
Earlier this week, the American business magnate, Warren Buffett also invested in Ally Financial. The stock is down 25% from its year-to-date high.
Why else does he like Ally Financial
On average, Wall Street sees upside to $58 a share in Ally Financial that translates to a 50% upside from here. Quoting other reasons why he likes the NYSE-listed company, Nygren said:
Ally Financial Inc is also repurchasing its stock at current prices it would be about 17% of their share base this year. So, even if the top-line does not grow at all, earnings per share would be growing close to 20% percent.
Last month, the U.S. financial services company reported $2.03 of per-share earnings for its fiscal first quarter versus the consensus of $1.93. Its revenue, however, was below Street expectations.
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