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5 Cheap Bank Stocks With a Strong Earnings Future

4. Bank of America

Shares of Bank of America (BAC - Get Report) closed at $9.53 Monday, for a remarkable year-to-date return of 72%, following last year's 58% drop. With such extreme number's, it's important to point out that the 12-month return for the shares has been a negative 32%.

The shares trade for eight times the consensus 2013 EPS estimate of $1.19, and for 0.8 times tangible book value.

While Bank of America's capital plan submitted to the Federal Reserve for the stress tests didn't include an increased return of capital to investors through higher dividends or share buybacks, the company's passing grade on the stress tests was quite a catalyst for the shares, which went up 19% for the week, through Monday's close.

Following the Fed's stress test results announcement, Citigroup analyst Keith Horowitz said that Bank of America "was a relative winner, given stressed capital levels did not look materially weaker than peers, as some may have expected," and showed "reduced tail-risk of a required capital raise given its capital ratio bottomed at 5.7% under the Fed's adverse economic scenario used for the stress tests which was not far different than peers and would expect investor sentiment to start to bake in expectations for modest capital return starting in 2013."

Horowitz has a neutral rating on Bank of America, with an $8.50 price target, estimating the company will earn 50 cents a share this year, followed by 2013 EPS of 70 cents.

Interested in more on Bank of America? See TheStreet Ratings' report card for this stock.

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