5. Bank of America
Shares of Bank of America were up 68% year-to-date, through Monday's close at $9.30. During 2011, the shares dropped 58%.
The shares trade for 0.7 times their reported June 30 tangible book value of $13.22, and for ten times the consensus 2013 EPS estimate of 91 cents. The consensus 2012 EPS estimate is 55 cents
For the 12-month period ended June 30, Bank of America's ROA was 0.52%, while the company's ROE was 4.84%.
With hindsight being 20-20, it's clear that there was a lot of money to be made for investors jumping into BAC shares at the end of last year, or early this year. But the shares have been quite volatile, and the mortgage putback theme is likely to be the main story for the company for some time to come.
During the second quarter alone, Bank of America's mortgage purchase demands from Fannie Mae (FNMA), Freddie Mac (FMCC) and private investors increased by 41%, to $22.7 billion as of June 30. Oppenheimer analyst Chris Kotowski on Sunday said that "one could make the argument that BofA looks cheap here as well, but part of that is because the market is already baking in the putback losses and their ultimate impact on [tangible book value]." The analyst shies away from Bank of America for the time being, saying "BofA/Countrywide had $222B of principal at risk as of 1Q11, and we suspect this number is now somewhere between $250B and $300B. With losses to investors in the $125B to $250B range we just can't get comfortable with the potential impact to BAC and some of that is currently reflected in the optically attractive [price-to-tangible-book-value] ratio."
BAC data by YChartsInterested in more on Bank of America? See TheStreet Ratings' report card for this stock.
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