WELLS FARGO & CO. $35 - New York symbol WFC

WELLS FARGO & CO. $35 (New York symbol WFC; Conservative Growth Portfolio, Finance sector; Shares outstanding: 5.3 billion; Market cap: $185.5 billion; Price-to-sales ratio: 2.1; Dividend yield: 2.5%; TSINetwork Rating: Average; www.wellsfargo.com) earned a record $18.9 billion, or $3.36 a share, in 2012. That’s up 19.1% from $15.9 billion, or $2.82 a share, in 2011.

The bank continues to do a good job of adjusting the terms of troubled loans it acquired when it bought rival banking firm Wachovia in 2008. In 2012, it set aside $7.2 billion to cover bad loans, down 8.6% from $7.9 billion in 2011.

Revenue rose 6.4%, to $86.1 billion from $80.9 billion. Low interest rates continue to encourage businesses and consumers to take out loans. The wealth management division is also attracting more clients. However, the bank is paying out higher interest rates to attract more depositors. That’s hurting its profitability.

Wells Fargo is a hold.

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One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

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