This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

10 Bank Stocks With Up to 55% Upside

Stocks in this article: BAC C WFC BPOP CSE CRBC WIBC OFG PSTB CSFL CPBK TD JPM

3. Bank of America

Bank of America's shares closed at $11.93 Friday, down 11% year-to-date. Based on the mean target price of $17.14, the shares have 44% upside potential.

As the nation's largest bank holding company, with a leading mortgage servicing position from its acquisition of Countrywide in 2008, Bank of America is at the forefront of the continued political and regulatory onslaught against the mortgage industry. The company faces plenty of financial and headline risk over the short term, with coming settlements with federal regulators over loan servicing and foreclosure procedures, and another settlement with states attorneys general, over the foreclosure mess.

Bank of America reported first-quarter net income of $2.1 billion, or 17 cents a share, compared to $3.2 billion, or 28 cents a share, a year earlier. First-quarter results were boosted by a $2 billion release of loan loss reserves, however, this was more than offset by a decline in mortgage banking income and increases in mortgage-related and legal expenses.

The company also reported that as of March 31, outstanding mortgage claims by counterparties totaled $13.6 billion, rising from $10.7 billion the previous quarter.

Nancy Bush, an independent bank analyst and contributing editor for SNL Financial, told TheStreet that Bank of America's first-quarter results included $3 billion in mortgage assessments and waivers, adding that with "an estimate of $7 to $10 billion for their possible additional liability and the repurchase mess," it could take an additional five years for the company's mortgage problems to play out. "The worst of this whole thing will happen for the large banks through the first half of 2012, so we have roughly another year of substantial expenses relating to the resolution of the housing crisis," Bush said.

Earlier this month, Rochdale analyst Richard Bove said he didn't "see any reason why Bank of America is not going to double from the current price," also saying he expected most of the mortgage problems to be addressed over the next twelve months.

Bank of America's shares are trading at a very low 7 times the consensus 2012 earnings estimate of $1.71 a share.

Out of 26 analysts covering Bank of America, 14 rate the shares a buy, while the remaining analysts all have neutral ratings.

9 of 11

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,672.60 -141.38 -0.79%
S&P 500 2,051.82 -11.33 -0.55%
NASDAQ 4,757.8790 +7.4820 0.16%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs