Investors may want to use the falls in Westpac Banking Corp's (ASX: WBC) share price to buy the stock after a major broker added the stock to its "top picks" list today.
That's not the only stock to make it to Credit Suisse's list of best buys. Fixed wireless broadband stock BigAir Group Limited (ASX: BGL) has also been included in the 15-stocks list.
The broker believes that Westpac is the most attractively priced Big Bank stock because it has plenty of room to cut costs and improve productivity.
As reported in the Motley Fool, efficiency gains are the biggest profit growth lever banks have in this current low-growth environment.
The banks have relied on credit growth and a drop in bad debt provisioning to boost earnings growth in the past but those tailwinds have largely run their course.
During Westpac's strategy day, it was noted by some analysts that the bank's cost-to-income ratio is between 5% and 7% above its competitors and this is largely because of its larger network of branches.
Branch closures are only one of the various things Westpac can undertake to lift productivity. There's also savings to be had from divisional restructuring and consolidation of information technology (IT) platforms.
There's also a perception that Westpac has the appetite to make big changes to drive down costs because it has a new chief executive at its helm. You often see new leaders make material changes to an organisation when they take charge.
Meanwhile, Credit Suisse was impressed enough with BigAir's solid 2014-15 profit result to add the stock to the group.
While there are market concerns about the acquisitive small cap's organic growth potential, the broker does not share these worries and is forecasting a compound annual growth rate of 18% up to 2017-18.
As I have written before, I think BigAir has a strong management team that knows what they are doing and a healthy balance sheet.
I think the stock will re-rate, just as M2 Group Ltd (ASX: MTU) did a few years ago, and Credit Suisse believes this re-rating could happen as soon as the February reporting season.
Shares in the bank shed 1.3% to $29.80 while BigAir slipped 0.6% to 77.5 cents in lunch time trade.
Some other notable stocks on Credit Suisse's best pick list include investment bank Macquarie Group Ltd (ASX: MQG), energy company Oil Search Limited (ASX: OSH), shopping centre operator Scentre Group Ltd (ASX: SCG), logistics company Brambles Limited (ASX: BXB) and wagering company Tabcorp Holdings Limited (ASX: TAH).
