Bank of America Corp (BAC), JPMorgan Chase & Co. (JPM): Buy the Breakout on This Bank for 33% Gains

For the upcoming third quarter, scheduled to be reported Oct. 14, analysts suspect increased transactions will push revenue to $22.3 billion, a 9.2% gain compared to revenue of $20.4 billion in the year-earlier quarter.

For the full 2013 year, analysts project revenue will increase 5% to $90.7 billion from $86.3 billion last year.

The earnings outlook is also solid.

Because of continued improvement in investment and brokerage income and increased banking fees, analysts estimate third-quarter earnings will reach $0.20 per share from $0.00 in the year-earlier period.

For the full 2013 year, analysts anticipate these growth drivers will contribute to a whopping 268% gain, with earnings reaching $0.92 per share from $0.25 per share last year.

In addition, the company appears attractively valued based on its five-year PEG ratio (price to earnings divided by growth rate) of 0.86. In general, a PEG ratio of 1 or under shows a stock that is attractively priced.

Risks to consider: Mortgage rates remain near historical lows, but could rise as the economy recovers. Higher rates could decrease mortgage lending volumes, potentially impacting profits at the bank. However, the consensus is interest rates will be stable until at least 2015 and possibly later.

Recommended Trade Setup:

— Buy BAC at or above $15.04
— Set stop-loss at $12.89, slightly below support
— Set price target at $19.95 for a potential 33% gain in four months

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