July 29, 2011 | In: Financial

Is BAC a Good Buy?

I have traded BAC many many times before, and I have stopped trading it back in January. The reason why I stopped trading it is because it was one of the very few stocks (and the only non-bear stock) that I have lost money on. It’s not that I think this stock is jinxed, it’s just that I’m now burned so many times before because of BAC that I dread even thinking about buying it.

In any case, the stock is currently trading below the $10 level, which means that the stock is, by all standards, cheap. But the question is, is it a good buy?

Here are some facts about Bank of America:

– It is still one of the most powerful banks in the United States, with some exposure to Europe (and its myriad of problems).
– Its market capitalization has dropped below $100 billion for the first time since April 2009 (when recession was at its peak)
– It is resolving, slowly but surely, its problems with the government.
– It is addressing its exposure to the sub-mortgage crisis.
– Its stock is trading at its lowest since April of 2009.
– Its stock has been showing bearish technical movement since mid 2010 (which means it will take some time to confirm that the stock has reversed the bearish trend).
– Its stock is consistently outperformed by that of Citigroup (Hmmm, check my article about Transocean and Noble, maybe at one point BAC will catch up with C)
– Its stock is trading more than 50% below its book value (which is $20.29).
– Bank of America is here to stay.
– The gloomy days are over, it’s just that investors (like me) really hate this stock and are afraid of it.
– Once the bank shows a positive EPS, the stock will jump!

I think BAC has a huge chance of becoming a good stock, simply because it is way undervalued by most standards, and the bank has a huge potential once the sky becomes clear. But I will definitely stay away from it until I see a clear sign that BAC has reverted its bearish trend.

1 Response to Is BAC a Good Buy?


How Low Can BAC Go? « Fadi El-Eter

August 8th, 2011 at 9:21 am

[…] of months. But one thing is for sure, this stock is now undervalued. I have already stated that BAC is a good buy when it was trading just below the $10 price, and I think it’s even a better buy right now […]

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