U.S. Bancorp, Pentair Make Fortune’s Top 15 Stock Picks

Fortune magazine surveyed “elite fund managers” to pick the best stocks to invest in next year, and Minneapolis-based U.S. Bancorp and Golden Valley-based Pentair made the cut.

Two local companies are on Fortune magazine’s recently-released list of “15 top stock picks from star investors.”
The stocks of Minneapolis-based U.S. Bancorp and Golden Valley-based Pentair are among those that hold the most promise for 2013, according to Fortune.
To compile the list, the magazine surveyed “elite fund managers” who have expertise in a variety of industry sectors and stock styles.
U.S. Bancorp—whose holdings include U.S. Bank, the country’s fifth-largest bank—was recommended by Tim Hartch, who manages a $3.5 billion fund called BBH Core Select. He said that of all the big commercial banks in the country, U.S. Bank reaps the highest return on equity and the highest return on assets.
Hartch told Fortune that he was impressed by U.S. Bancorp’s straightforward business model. Instead of relying on trading and investment banking, the financial services company relies on old-fashioned ways to make money, which include collecting deposits, issuing loans, and offering wealth management services, Harth said.
“If the regulators could have their wish, all banks would look like U.S. Bancorp,” he added.
While U.S. Bancorp isn’t immune to industry challenges such as new regulations and low interest rates—which eat into banks’ profits—its payment-processing business helps keep profits up, according to Hartch.
“It’s a nice earnings stream that doesn’t require a significant amount of capital,” he told Fortune.
Shares of U.S. Bancorp’s stock were trading at about $32.33 on Tuesday morning. This year, the stock peaked at $34.45 on October 1 and reached its lowest level of $27.61 on January 3.
Meanwhile, Zach Shafran, a fund manager at Ivy Science and Technology, told Fortune that Pentair, which makes water filtration and pumping systems, is a promising stock because there is demand for its products worldwide.
Pentair’s recently completed $4.9 billion merger with the flow-control business of Swiss company Tyco International will enhance its global presence and more than double its sales, Shafran said.
In addition, Shafran believes the company can exceed its goal of increasing annual profits by 50 percent by 2015.
Shares of Pentair’s stock were trading at about $48.36 on Tuesday morning. This year, the stock reached a high point of $48.74 on December 3 and its lowest price of $34.11 on January 3.
To view Fortune’s full list of promising stocks, click here.