Cramer hasn’t liked bank stocks for some time, but for investors who insist on owning a financial, the “Mad Money” host said he can get behind U.S. Bancorp.
Cramer likes U.S. Bancorp because it’s a “super regional.” It is big enough to compete with large institutions, but small enough that acquisitions, loan growth and deposit growth still have a meaningful impact to the bottom line. In turn, U.S. Bancorp reported the best quarter of any bank in October.
The Minneapolis-based financial institution also has a conservative management team that didn’t get involved in the risky mortgage business that continues to plague its competitors. Instead, it gets 46 percent of its revenue from fees and 54 percent of its revenue from interest income — both of which are recurring sources of income.
It also has a strong balance sheet that Cramer thinks will pass any stress test. Business is so strong, he thinks it could raise its dividend yield, too. USB currently sports a modest 1.9 percent dividend yield.
So when the smoke clears, Cramer thinks USB could be the one stock to pop. It’s also worth pointing out that most bank stocks trade together, though, because they are greatly influenced by exchange-traded funds . But if one bank stock were to break free from the ETFs, Cramer thinks USB could be it.
When this story was published, Cramer’s charitable trust owned U.S. Bancorp.
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