This Day On The Street
Continue to site
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

Bank of America: When Will It Hit $10: Poll

NEW YORK ( TheStreet) -- Bank of America (BAC - Get Report)'s stock price has had a tremendous run of late.

Since bottoming at $4.92 in December, the shares are up 33% through Thursday's close.

No question there is a lot to be bullish about. The stock trades at just a fraction of book value, so even allowing that a rival like Wells Fargo (WFC) runs circles around it, you're paying roughly one third the price.

The bank still has a trillion dollars in deposits. In a normal environment--let's say a 6% 10-year bond and a 3% fed funds rate -- Bank of America can make super safe loans at 7% interest while paying just 3% for the privilege. When you've got a trillion dollars in deposits, that's a lot of free money. And don't forget all the annoying fees it brings in on top of that. Even if the bank decided to be super nice and cut those fees in half--tons more free money flowing into the operation.

Then take something like its U.S. credit card operation. Every credit or debit card transaction involving a Bank of America-branded card--Bank of America takes a nice cut. On credit cards, its 2%.

Bank of America still has a world class investment banking and brokerage operation following its acquisition of Merrill Lynch in 2008. And it remains one of the four biggest lenders in the U.S., so it can still use its balance sheet to get in on a large corporate merger, leading to advisory and underwriting fees.

So you're worried about mortgage exposure? And well you should be. Countrywide, which Bank of America acquired in 2008, was probably the single-most aggressive mortgage lender during the boom years. Even if they hadn't played fast and loose with the rules, that would be bad news. Think of all those cookie--cutter houses sitting out there in the California desert, in Arizona, in Florida. Bank of America owns an awful lot of them.

But did Angelo Mozilo and the gang at Countrywide play fast and loose with the rules? You bet they did. Bank of America has already paid out or set aside $35 billion to deal with the legal fallout, according to Citigroup analyst Keith Horowitz.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr 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

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
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!
BAC $15.56 0.00%
AAPL $124.75 0.00%
FB $80.78 0.00%
GOOG $524.05 0.00%
TSLA $206.79 0.00%


DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs