"The company has over a trillion dollars' worth of deposits. Those deposits are growing, not shrinking, and that's the ultimate source of revenues for a bank," Bove said in a phone interview Monday. He also cites strong performance in the bank's Merrill Lynch securities unit.
"Bank of America should not have any revenue problems if the economy contributes the way I think it will in the second half of this year," Bove says. He recommends shares of Bank of America, along with Citi, Goldman Sachs, Morgan Stanley, JPMorgan and Wells.
While Bove says he doesn't have an official preference among his buy recommendations, if he did it would be Bank of America, since it trades at the biggest discount to book value out of the group.
Bank of America trades at 64% of book, according to
data, compared to 77% for Citi, 78% for Morgan Stanley, 101% for JPMorgan, 102% for Goldman and 148% for Wells.
"All these companies ultimately revert to the mean -- the mean being book value, so [Bank of America] will get to book value and therefore I think it's the most attractive in the group," he says.
Bank of America shares were up 1.79% late Monday morning, slightly better than Wells, Goldman and JPMorgan, but slightly worse than Morgan Stanley and Citi.
Written by Dan Freed in New York