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
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Top 10 Most Expensive Luxury Cars in the World – 2014

Killer Small Business Ideas

The 50 Best Personal Finance Blogs

Most Expensive Apartments in New York City

Bloodiest UFC Fights Ever Fought

Most Expensive Rum Brands 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!