Bank of New York Mellon: Sideways action is Buy opportunity

Posted Oct 27th 2009 3:40PM by Joseph Lazzaro
Filed under: Bank of New York (BK), Stocks to Buy

The extended Buy opportunity continues at Bank of New York Mellon (NYSE: BK), and I'm Reiterating my Buy rating for the company's shares, first recommended on April 6, 2009 at a price of $28.16.

Founded by Alexander Hamilton, 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.

BK's shares have flat-lined since about June, even though net interest margins should widen, and costs controls to-date have been adequate. Further, in FY2010 revenue should rise 5-7%, but as of now, the market has not priced that revenue gain into the stock. The First Call FY2009/FY2010 EPS estimates for BK are $2.05 to $2.41.

Technically, BK's stock chart, as noted, has basically straddled the 50-day moving average for six months. Typically, that would be a cause for concern, but BK gets the benefit of the doubt here.

Stock Analysis: The Bank of New York Mellon is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in BK now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your BK position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $17.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: BK

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Reader Comments (Page 1 of 1)

10-28-2009 @ 2:26PM

HENRY CHOKE said...

CUT DIVNDEND LOST MONEY USED TO BE 60 BUCKS FIVE YEARS AGO. BONY MANAGEMENT IS TERRIBLE,THEY GIT RIDE OF ALL SMART PEOPLE KEPT THE ROBOTS AND OUTSOURCE TO INDIA. LETF WALL STREET TO BROOKLYN , FLORIDIA, UPSTAE NEW YORK . THEIR THE REASON . ONCE BACOT RETIRED IT WAS THE END OF PROFESSIONAL BANKING BUSINESS. MANAGEMENT WAS HOSTILE TO ALL EMPLOTEES , CRACK UP AFTER 9/11 SOLD OUTTHEIR BEST PERFORMERS.