Drip
Portfolio Report
Wittling Down the List
by Dale Wettlaufer ([email protected])
Alexandria, VA (July 8, 1998) --Slimming down the list further from yesterday, again, I keep forgetting about Merrill Lynch (NYSE: MER) not having a DRIP. So, that one is dropped. (I'll provide the complete list at the end of this column.)
As for Merrill, it makes sense, I guess, that it doesn't have a DRIP since it's in the brokerage business. But for non-DRIP accounts, I still think this is a quality company and makes even more sense when the market is down. Personally, the leverage isn't quite my cup of tea there, even if the effective leverage of the company is of a smaller magnitude than the balance sheet suggests. There are other companies that offer the global exposure of this company, though, so it's not as if there aren't opportunities like this for the DRIP investor.
Speaking of global powers, Citicorp (NYSE: CCI) surged this morning after Merrill Lynch's Judah Kraushaar initiated coverage of Citigroup, the product of the merger between Citicorp and Travelers (NYSE: TRV), with a near- and long-term buy rating. Kraushaar believes the company will close the merger this month, far ahead of schedule. As there doesn't appear to be a problem with the Federal Reserve, this isn't implausible, but it is something of a surprise. According to Reuters, the analyst added that the company will have 100 million customers in 100 million different countries and will be able to achieve 20% earnings growth in 1999. Travelers closed up $4 11/16 to $69 1/4 on the day.
Oh, and by the way, Fifth/Third Bancorp (Nasdaq: FITB) has to make it into the finalist group. This is a super banking company out of Cincinnati that we've talked about before. What I have heard from people that have done business with them is that they are particularly good in middle market commercial banking, or business with companies doing between $20 million and $200-500 million in revenues. I definitely want to put this on the list because it's a growth-oriented bank that is small enough to offer longer-term investors good upside.
In this general size of bank, I would also recommend investors take a look at M&T Bank's (NYSE: MTB). It used to be First Empire State Corp., traded on the American Stock Exchange, but it has since moved to the NYSE and has changed its name to reflect its operating name. The company recently closed its merger with OnBanCorp, which gives it superior market share in the Syracuse, New York market and throughout Central New York. With that acquisition, M&T has 20-30% market share nearly across New York State down to Albany. The company today reported second quarter earnings, reflecting the first full quarter of earnings for the combined entity.
Finally, I forgot to mention BankBoston (NYSE: BKB) yesterday. I really would have a hard time leaving that one out. It would be hard to leave out US Bancorp (NYSE: USB), too. Both are excellent companies with numerous specific strengths to recommend themselves well. So, the finalized list we have follows:
1. Zions Bancorp (Nasdaq: ZION)
2. Fannie Mae (NYSE: FNM)
3. State Street Corp. (NYSE: STT)
4. First Tennessee National (Nasdaq: FTEN)
5. Norwest (NYSE: NOB)/Wells Fargo (NYSE: WFC)
6. NationsBank (NYSE: NB)
7. Regions Financial (Nasdaq: RGBK)
8. Fifth/Third Bancorp (Nasdaq: FITB)
9. Citicorp (NYSE: CCI)/Travelers (NYSE: TRV)
10. BankBoston (NYSE: BKB)
11. US Bancorp (NYSE: USB)
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