Wells Fargo stock is a component of the Dow Jones Financial Index, the S&P 100 and 500 indexes and is considered a “cyclical” stock due to its dependence on the demand for financial services and a healthy economic environment. Trying to decide if it's right for you? Read on to learn how to buy Wells Fargo stock.
Overview: Wells Fargo (WFC) and Stock History
Wells Fargo was founded in 1852 by Henry Wells and William George Fargo, who also originally founded the American Express Company. The company was based in San Francisco and intended to take care of the stagecoach express and banking business prompted by the California Gold Rush.
The company transported gold dust and bullion, as well as certificates and other products, moving the merchandise to the Isthmus of Panama and then overland to board ships on the East Coast. By 1866, the company had become the largest stagecoach operator in the West and consolidated all lines under the Wells Fargo name.
Wells Fargo was actually better known for its express stagecoach operation than for its bank by the beginning of the 20th century.
The current bank is known as Wells Fargo & Company and the firm’s primary subsidiary is called Wells Fargo Bank, N.A. as the result of a 1998 merger with Minneapolis-based Norwest Corporation and the subsequent acquisition of Wachovia in 2008.
Future Outlook for Wells Fargo
Wells Fargo stock hit a low of $6.40 per share in 2009 as a result of the global financial crisis, but it has been on an uptrend ever since. WFC stock hit an all-time high of $63.47 per share in January of 2018, but shares currently trade around $34 amid the coronavirus pandemic.
The future outlook for Wells Fargo depends in large part on the prospects for the U.S. economy in the near term, as businesses recover from the pandemic.
Pros of Buying Wells Fargo Stock
- Positive Analyst Research: According to some analysts who follow WFC stock closely, the negative news from recent scandals is already priced into the stock, so many have recommended that their clients buy WFC stock.
- Stock market/business cycle: A widely-anticipated slowing of the U.S. economy would translate into less business for everyone, with cyclical U.S. stocks usually being the first to sell off.
Cons of Buying Wells Fargo Stock
- Internal misconduct: The company has been subject to numerous lawsuits for its own misconduct. For example, in 2016, the bank paid $185 million for the fraudulent creation of 1.5 million checking and savings accounts and 500,000 credit cards that were never authorized by its customers in Los Angeles.
- Loss of consumer confidence: The account fiasco was just one of many lawsuits Wells Fargo has settled for hundreds of millions of dollars. Because of the accounts scandal that took place in 2016, many people have withdrawn their money and business from Wells Fargo. The company still faces an uphill battle to regain public trust.
How to Buy Wells Fargo Stock Using a Broker
- Pick a Broker
Once you know what you need from a broker, you can better determine the best online brokerage for you.
For example, if you need a bank account and a brokerage account, you might try E*TRADE, since it operates an online bank as well as a brokerage. If you have more of a trading background and want to trade multiple assets, then a broker like Interactive Brokers might suit your needs. If you're looking to trade for free, check out Webull.
- Evaluate Different Brokers’ Trading Platforms
Most online brokers offer their customers a virtual or demo account to evaluate their platform and practice trading without committing any funds. You can open accounts like this with as many brokers as you want to see how well each trading platform fits your needs. Remember, trading platforms vary from broker to broker, and some include features you will not find with others.
- Fund your Trading Account
In order to purchase WFC stock, you must deposit funds into a trading account. Depending on how much you budget for your stock purchase, you should deposit at least that amount into the trading account and/or the minimum deposit amount required by the broker, whichever is greater.
Keep in mind that each broker has its own rules for deposits and withdrawals. Most take credit cards and bank transfers for deposits, so make sure you have access to the right method for making deposits.
- Buy Wells Fargo Bank Stock
Now, put in a bid in for WFC stock. Hopefully, you’ve done enough trading in the demo account to know how to enter a buy order.
You may also want to closely watch WFC stock to get a feel for the market and determine an optimum price to buy at.
Another good idea is to check the news. News can often affect the price of WFC stock and could provide a buying opportunity or signal that better levels may occur in the future.
A good way to determine a price level to purchase Wells Fargo stock is to analyze the stock with technical analysis to get a sense for the best entry price and time to buy. Once you have decided on the level, you can enter a bid either at the market or at the lower price level you think best.
Best Online Stock Brokers
Is Wells Fargo Stock for You?
Today, Wells Fargo offers an impressive broad-based banking sector investment. It provides its customers with banking, investment and mortgage products and services and offers financial services at 7,800 locations, with more than 13,000 automatic teller machines (ATMs).
Wells Fargo also has a presence in 37 countries and serves 1 in every 3 households in the United States. The company was ranked at number #26 on Fortune’s 2018 ranking of the largest U.S. corporations.
The bank, along with JP Morgan Chase, Citigroup and Bank of America, is currently one of the “Big Four” banks in the United States, which makes it attractive for many investors looking closely at the financial sector.
Nevertheless, due to its cyclic nature, WFC stock would do best in an economic upswing, such as the one we’ve experienced for the past several years, although the future economic climate may not be as favorable for the bank. Wells Fargo also has a number of headwinds to overcome and so its stock may not be the best way to invest in the current market environment.
Watch the business cycle, too, which appears to be topping out as can be witnessed by the flat yield curve and soft real estate prices, and a future economic decline will negatively impact all cyclical stocks like WFC. While WFC could gain modestly in the short term, given the current market and economic environment, defensive stocks seem to be more suitable for long-term and medium-term investments.
About Jay and Julie Hawk
During her financial career, Julie developed world-class expertise in technical analysis, including Elliott Wave Theory, and was deeply involved in initiating research into automated trading and trading signal systems. As a member of the San Francisco Writers’ Guild, Julie regularly wrote trade strategies, educational material, market commentary, foreign exchange newsletters, reports, articles and press releases. In addition, Julie was interviewed for various financial markets magazines and news wires in her professional capacity as a forex and derivatives expert. Since retiring from working at banks, Julie has been writing and editing books and articles about financial markets for companies like Benzinga, as well as trading forex online and mentoring other traders as part of TheFXperts’ financial team.
In addition to trading stock index, forex and commodity futures and options professionally on exchange floors, Jay also has experience trading stocks and options for private investors and trading forex online for his own account. He has also developed extensive experience in performing and using fundamental economic and corporate analysis to inform his trading and investment activities. Jay is also an expert financial writer with particular expertise in reviewing online brokers and investor services.