As with Wells Fargo, investors should also pay special attention to how Bank of America performs in net interest margin (NIM). This is the metric that explains how well management has utilized capital relative to the bank's debt situation. BofA's NIM results have been a popularly cited argument for analysts who want to complain about valuation.
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Now, I will grant that BofA has underperformed when compared to both Wells Fargo and JPMorgan in terms of their respective earnings assets. At the same time, though, neither Wells Fargo nor JPMorgan have had to drastically transform their businesses -- certainly not to the extent of Bank of America. Not to mention, they both have longer-tenured CEOs than BofA's CEO, Brian Moynihan, who is being compensated in the form of performance-based restricted stock.
What this means is that Moynihan, who has laid out a blueprint for the bank's sustainable growth over the next several years, is being compensated based on his ability to execute that vision. Here, too, details such as these are being ignored and should be kept in perspective.
Plus, I believe it's time for the Street to drop the "villain" label it has long plastered on Bank of America. It's gotten old. And with mortgage originations on the rise and the housing recovery in full swing, the worst is over for Bank of America. Accordingly, I would be a buyer here ahead of earnings, and believe that BofA's fair market value will reach $20 by the second half of 2014.
At the time of publication, the author held no position in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.