The bank's shares are about three to four years away from $30, according to the veteran analyst.
"I think there's $3 in earnings power there and this stock can easily sell at 10 times earnings, once you recognize that the company is two companies: its Countrywide and its Bank of America and once you get Countrywide taken out of Bank of America, which is the lawsuits are paid, the bad loans are paid the foreclosures are done, all of a sudden Bank of America is there and Bank of America can earn three bucks," Bove said in an interview on Tuesday.
The latest positive sign Bove sees from the bank is a rally in its bonds."The value of its debt is soaring at the present moment. In the third quarter of 2011, the company was being attacked on the basis that it could be run out of business similar to a Lehman Brothers or a Bear Stearns, and the value of its debt fell dramatically," Bove recalls. Since then, however, the debt has rebounded, enabling Bank of America to issue debt last week that yielded just 3% more than 10-year Treasuries, where comparable debt from JPMorgan Chase (JPM) sold at 2.7% above Treasuries only a week prior to that, Bove says, pointing to the turnaround as a tremendous vote of confidence from the bond market in Bank of America's ability to pay its debts. To Bove's credit, he began recommending investors buy the bonds at those low levels of last year, and he believes that confidence will eventually translate to a rise in the stock far greater than the 42.18% it has gained year to date. "I don't consider that anything given [how low] the stock was," he said. "The bond market is telling the stock market something very significant about Bank of America. The bond market is telling the stock market this company is out of the woods, this company has changed, this company is not insolvent, and if the stock investors figure it out they will push these shares sharply higher."
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV