I’ve purchased Thompson Creek Metals Company Inc (USA) (NYSE:TC) in numerous blocks over the past year and change and am fully committed to this company for the long haul.
Returns you can bank on
I’m not actually sure there’s a more hated big bank than Bank of America, which is precisely what made me like the stock so much back in 2011. My first two purchases came just weeks before Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.B) unveiled a $5 billion investment in Bank of America Corp (NYSE:BAC) via preferred stock with its handsome 6% yield, not to mention the 700 million in stock warrants Berkshire received as well. My final purchase, which more than doubled my initial stake, came three months later.
What I saw in Bank of America Corp (NYSE:BAC) back then was an opportunity for it to shed assets and increase liquidity to adequate levels without sacrificing much of its earnings capability. Similar to what American International Group Inc (NYSE:AIG) did in order to repay its government loans, Bank of America Corp (NYSE:BAC) took to the auction block and sold off nearly its entire stake in China Construction Bank for approximately $6.6 billion in cash. It also sold off Merrill Lynch’s international wealth management business for $2.5 billion this past summer.
The end result is that Bank of America Corp (NYSE:BAC) is much better capitalized than it’s been in years. According to its most recent quarterly filing, its tier 1 common capital ratio now sits at 11.06%, total average deposit balances rose by 11% from the previous quarter to $28 billion, and based on the recently conducted stress test results by the Federal Reserve, it — and 16 of 17 other peers — passed with flying colors.
Looking ahead, I believe Bank of America Corp (NYSE:BAC) has a decent chance to head higher once it can get every last lawsuit tied to the recession and housing bubble behind it. However, I admit that with the markets sitting near all-time highs and potential lawsuits still outstanding, I obliged by taking profits on nearly half of my Bank of America position over the past two weeks. My remaining shares, which are up in excess of 100%, I’m planning to hang onto for the time being.
The article My Top 2 Stocks: Thompson Creek Metals and Bank of America originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams owns shares of Thompson Creek Metal and Bank of America, but has no material interest in any other companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. The Motley Fool owns shares of AIG, Bank of America, and Freeport-McMoRan Copper & Gold and has the following options: Long Jan 2014 $25 Calls on American International Group. The Motley Fool recommends AIG.
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