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
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Bank of America to Fall Off Cliff, Then Bounce: Analyst

NEW YORK (TheStreet) -- Investors who are looking for a recovery play may have an excellent opportunity to scoop up shares of Bank of America (BAC) on the cheap, as the "Fiscal Cliff" drama continues in Washington.

As nearly all of our readers know by now, the federal tax cuts extended by President Obama as part of a deal with Republicans in Congress in August 2011 will expire at the end of the year, without a new deal. Along with the tax increases, the Budget Control Act of 2011 requires a large cut in federal spending, in an effort to reduce the annual federal budget deficit by $1.2 trillion over 10 years. Many economists believe that "falling off the fiscal cliff" at this stage of a slow economic recovery would cause the U.S. economy to slip back into recession.

Guggenheim Securities analyst Marty Mosby on Monday said in a "Tactical Trading Sell" report that Bank of America "is one of the leading candidates for a significant correction if the pressure on the U.S. economy from the Fiscal Cliffs begins to build."

Mosby actually rates Bank of America a "Buy," with a $12 price target, which would represent 21% upside, however, the rating and the target have 12-month outlooks, while Mosby believes "BAC could trade below $8 over the next three months if it becomes apparent that the U.S. economy is about to be pushed over several of the upcoming Fiscal Cliffs."

The analyst's short-term trading range for the next three months for Bank of America is from $7 to $8 a share, "based on a 60% price to current tangible book value multiple. BAC currently trades at 73% of current tangible book value." Mosby said that "the risks to this tactical trading call are twofold: Washington politicians work together to craft the 'Grand Bargain,' avoiding the upcoming Fiscal Cliffs, or the economy builds up enough momentum to absorb the unfavorable impacts of higher taxes and spending cuts and still keep growing."

Stock quotes in this article: BAC, C, JPM, WFC 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

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.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

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