5 52-Week Low Stocks with Upside Potential

3. Bank of America Corporation (NYSE:BAC)

Number of Hedge Fund Holders: 84   

52-Week Low as of May 23: $32.96

Real-Time Share Price as of May 23: $35.15

Bank of America Corporation (NYSE:BAC) provides banking and financial products. The company has beaten market expectations on earnings consistently for the past eight quarters and remains in a position to take maximum advantage of rising interest rates. The decline in the share price of the firm has baffled analysts, with most attributing the selloff to concerns around a recession. However, the EPS growth estimates for the stock, despite recent uncertainty, continue to hover around 7.5% for the next five years. 

On May 3, Oppenheimer analyst Chris Kotowski maintained an Outperform rating on Bank of America Corporation (NYSE:BAC) stock and lowered the price target to $50 from $52, noting that loan growth and rising interest rates were good for the banks even during a recession. 

At the end of the fourth quarter of 2021, 84 hedge funds in the database of Insider Monkey held stakes worth $47 billion in Bank of America Corporation (NYSE:BAC), compared to 72 in the previous quarter worth $46 billion.

In its Q1 2022 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Bank of America Corporation (NYSE:BAC) was one of them. Here is what the fund said:

“There are many times when volatility and beta give false signals. Banks outperformed in the post-tech bubble bear market of the early 2000s. At the market peak prior to the financial crisis (when risk was the highest in those names!), Bank of America Corporation (NYSE:BAC) had a 0.9x beta (based on the trailing 5 years) suggesting its “risk” was below the market’s. Wrong! It massively underperformed in the financial crisis. Realized beta over the 5 years from the pre-crisis’ 2006 peak measured 2.3x.

A much better indicator of actual risk, both before and after the financial crisis, was the quality of the balance sheet and risk-taking appetite. Beta is backwards looking and non-stationary. Relying on it underestimated risk going into the financial crisis and overestimated coming out of it (its beta has continued to fall over the past decade).

We care greatly about risk. We spend a significant amount of time thinking about the risks to our investments. We measure risk as permanent impairment of capital, which means the prices and values don’t bounce back. Business fundamentals determine risk.”