One sure way to not impress your friends at a dinner party is to start talking about the banking sector. Well, all banks are not the same, and there has been one bank that's managed to avoid the devastation that Wall Street has inflicted on itself, the nation, and the world, and of course it's the bank that was founded by Alexander Hamilton: The Bank of New York Mellon (NYSE: BK).
The Bank of New York provides services that enable institutions and individuals to move and manage their financial assets in more than 100 markets globally. The core of BK's business, custodial services, is doing just fine, with $16 trillion in assets under custody.
Moreover, new business wins should shine in 2009, as more clients seek established, trusted custodians in light of credit market turmoil and investment management scandals. Further, expenses are under control, and with the stock market sell-off taking down just about every share price, including BK, an entry point in the current $29-33 looks attractive. The First Call F2009 / F2010 EPS estimates for BK are $2.57 / $2.88.
Stock Analysis: The Bank of New York Mellon is a moderate-risk stock. Consider buying a 25% position in BK now; then buy another 25% in three months, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your BK position in the first half of 2009. Sell / Stop Loss if you were to buy shares in this company: $17.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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