6 Stocks That Will Benefit From a Dovish Federal Reserve - 5 of 6

#5 - Wells Fargo (NYSE:WFC)

Arguably, betting on Wells Fargo (NYSE:WFC) is not for the risk-averse investor. Banks and other financial stocks are often the big losers when interest rates decline. But Wells Fargo is trading at levels that may have become too low to simply ignore out of hand.

First the bad news. The company’s stock hit the undeniably bearish “death cross” technical signal. On March 5, the 50-day moving average of WFC stock crossed below its 200-day moving average. And sure enough, the stock price fell.

But the stock is trying to find a base. And with the newly signed stimulus bill, Wells Fargo may have an opportunity. In 2018, the Federal Reserve imposed growth limits on Wells Fargo as punishment for the revelation that the company had opened millions of fake accounts and used those accounts to charge customers unnecessary mortgage fees or for auto insurance.

But, as Emily Fitter reported in the New York Times, with so many small business owners filing requests to get a part of the stimulus money, the Fed is considering lifting those sanctions to make it easier for the bank to lend. Although this would be likely a temporary truce, it would give the bank a chance to establish credibility.

The scandal is far from behind the bank. This is still a risky stock to buy, but trading at around 7x earnings, it is a cheap stock. And with a dividend yield that is currently at 6.83%, investors do get some shelter from the risk they accept.

About Wells Fargo & Company

Current Price

$80.07

Consensus Rating

Moderate Buy

Ratings Breakdown

10 Buy Ratings, 10 Hold Ratings, 0 Sell Ratings.

Consensus Price Target

$73.39 (8.3% Downside)