3 Metrics That Make Bank of America Corp (BAC) A Buy

Page 1 of 2

Investors need to be careful about assumptions. One popular assumption that I’ve heard in the news is that big banks will have to deal with years of problems before they can return to their glory days. I’ve written about Bank of America Corp (NYSE:BAC) before, and to be blunt, the company has surprised me with the speed of their recovery. Less than a year ago, Bank of America was struggling in multiple areas like consumer real estate, mortgage, and home equity loans, just to name a few. Today the story is very different. Bank of America is working through its problems, and even after a decent run in the stock, the shares appear to offer significant value.

Bank of America Corp (NYSE:BAC)Bankers Get A Bad Rap
Admittedly I’m not suggesting that Bank of America is the best bank in the country. In my opinion, that title is a tie between BB&T Corporation (NYSE:BBT) and U.S. Bancorp (NYSE:USB). These two banks have consistently turned in superior organic growth relative to their peers. In the “big bank” comparison, most investors would point to Wells Fargo & Company (NYSE:WFC) as a better option than Bank of America. Others might suggest that Citigroup Inc. (NYSE:C) could be a good turnaround candidate. However, there are three different reasons that Bank of America appears to be a good opportunity at this time, and two of the three are major changes over the last year.

Can You Believe This?
If I told you that four companies reported EPS growth of 29%, 22.58%, 15.4%, and 25%, would you be interested? How about if I told you those were the numbers reported by BB&T, Citigroup, U.S. Bancorp, and Wells Fargo respectively? Analysts are also suggesting this is just the start of positive earnings from these companies. In the next few years, analysts expect BB&T and Citigroup to grow earnings by 10.87% and 11.65% respectively. By comparison, U.S. Bancorp and Wells Fargo are expected to grow EPS by 9.1% and 9.33%.

If you can believe it, Bank of America is expected to outperform all of the above. Analysts are calling for 18.76% EPS growth from the company over the next few years. What is even more impressive is, Bank of America sells for a forward P/E ratio of 11.8, which makes its PEG ratio just 0.63. By comparison, BB&T sells for a PEG of 0.95, Citigroup is at 0.78, U.S. Bancorp sells for 1.18, and Wells Fargo’s PEG is 1.03. The bottom line is, if Bank of America can meet projections, this is one of the cheapest bank stocks available relative to its potential earnings growth.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!