Bill Nygren gives away his favourite financial stock

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is a News Reporter at Invezz covering the European, Asian and North America stock markets. Wajeeh has 5… read more.
on May 19, 2022
  • Bill Nygren says there are plenty of cheap stocks in the financial sector.
  • The Oakmark portfolio manager revealed his favourite stock in this space.
  • The Financial Select Sector SPDR Fund is down 20% from its YTD high.

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:

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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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