After Acing Stress Tests is BAC a Buy?
Speaking to CNBC’s Maria Bartiromo at the World Economic Forum in Davos, Switzerland, in January, Bank of America’s (NYSE:BAC) Chief Executive Officer Brian Moynihan argued why his bank was outperforming the competition. Even though the institution took a $2.7 billion hit to earnings in the last quarter, due in part to the huge settlement with Fannie Mae, the company’s stock managed to advance more than 20 percent in the previous three months. The CEO attributed the bank’s improving situation to the fact that a majority of the bank’s major lawsuits are now in the past, it has downsized its investment business, and it has strengthening capital levels.
Bank of America’s stock has continued to march forward; this year to day, shares have risen slightly more than 10 percent, and they have gained just over 30 percent in the past 12-month period.
Here are three reasons why the bank’s stock is now a buy:
Banking analyst Meredith Whitney — who predicted Citigroup’s (NYSE:C) woes prior to the financial crisis — is usually bearish in her views on the market in general and on banking stocks in particular. But her opinions are changing. In an interview with CNBC on Monday afternoon, the analyst said, “I have not been this constructive, this bullish on the U.S., on equities in my career.”
She even said that Bank of America was one of the most undervalued bank stocks. “Very rarely do these big banks have both value catalysts and momentum,” she said. “Bank of America had all of that.” In her estimation, the stock has the power to climb to the 20-dollar-per-share range from its current 12-dollar-plus range in the next year and a half. When asked what catalysts for growth the company had, Witney explained that it was not revenue growth that she was expecting…