It appears as if the voice of the customer has won out. Bank of America (BAC) has scrapped the plans to institute its $5 monthly fee on all debit card purchases. The banking giant caught a lot of flak over the past few weeks from customers, the media, and most online sites about the proposed debit card fees. The $5 charge seemed like the final straw as customers threatened to close their accounts and move their business to credit unions and local banks. [Read more...]
Bank of America Keeps On Dropping
November 30, 2010 By Leave a Comment
This has not been a good week for Bank of America. Shares of Bank of America (NYSE: BAC) dropped over 3% today to $10.95 per share today. The stock has been in a free fall over the past year losing nearly half of its value.Why is the stock dropping?
Bank of America Drops Another 3%
October 21, 2010 By 4 Comments
The past month has not been kind to Bank of America (BAC). Shares of BofA have dropped 16.8% over the last month. The stock was priced at $13.65 just a month ago. The banking giant saw its shares drop another 3.3% to $11.36. Bank of America’s shares have been very weak over the past few weeks and the stock has been in a freefall.
Portfolio Update
September 13, 2010 By 2 Comments
I added shares of Bank of America (BAC) and Wells Fargo (WFC) to my portfolio. Analysts are still down on the financial sector. I think that these stocks are still a great contrarian play. An economic rebound is coming and these companies will benefit the most in the coming years.
Today’s Buys
August 27, 2010 By Leave a Comment
Today, I picked up shares of Bank of America (BAC) at $12.50 and added shares of Wells Fargo at $23.50. I am still a big believer in the long term viability of the financial sector.
Bank of America Drops 3%
August 12, 2010 By Leave a Comment
Frequent readers of this blog will know that I have been long Bank of America (BAC) since the stock plummeted in 2009. I used the market weakness of yesterday to buy more shares of Bank of America. The stock dropped to $13.04 in the after hours market. I always use weakness to add to my position. Bank earnings may take a hit but I still believe that the stock is trading at a huge discount based on the earnings power of BofA.
My Best Picks Over The Past Month
July 20, 2010 By 4 Comments
US Steel (X) has had a nice bounce since I recommended that investors pick up shares in the mid $30’s at the beginning of the month. Shares are up $7 giving investors an 18% gain.
Back on June 25th I recommended that investors get long Research In Motion (RIMM) when shares hit the $40’s. Shares appear to have bottomed out right at $47. The stock is up to $55 now. Investors should take profits now. I think that Research In Motion is headed lower.
On July 5th I suggested that investors get long Intel (INTC) at $19.48 and General Electric (GE) at $13.97. Shares of Intel have rallied 10.5% to over $21.50. GE has rallied 7.1%. I think that shares of GE have much more upside so I will continue to hold shares of General Electric.
My Current Picks
Bank of America (BAC) is a steal at $13 per share.
Exxon Mobil (XOM) is being given away at under $60.
Apple (AAPL) is worth buying at $245 a share. I would get long Apple shares.
I Am Still On The BofA Bandwagon
July 19, 2010 By Leave a Comment
I added more shares of Bank of America (BAC) through my DRIP plan today. Shares of Bank of America trade at just $13.46. The stock has been punished due to its lackluster earnings report and the expected negative impact that financial reform may have on BofA’s earnings. Let’s take a look at the pros and cons of investing in Bank of America.
The negatives for Bank of America are as follows:
1) Credit losses continue to rise as delinquency rates are increasing. Bank of America has tremendous exposure to the real estate market and credit card market.
2) Financial reform is expected to put a cap on interchange rates. This would severely impact debit card fee income.
3) Trading revenues dropped substantially after bolstering the bank in Q1.
4) Much of last quarter’s profitability was due to one time gains such as the sales of bank assets.
So, why should you buy the shares?
Bank of America trades at a discount to book value. The bank’s earnings power is still incredibly strong. Fee income could easily offset any future losses. I expect Bank of America to find new ways of generating fee income by charging for services that used to be free. Increased checking account service charges and increased account activity fees.
The large deposit base gives Bank of America the cheapest form of capital. Bank of America has enough cash reserves to weather any economic downturn.
The downside is already baked into the stock’s price. Analysts have been rushing to downgrade shares of BofA. This is a bank that could easily earn $3 a share in in 5 years. Even if Bank of America only earns $2 per share 3 years from now, the stock still only trades at just 6.5 times earnings.
This is definitely not an overnight play. It may take years for things to shake out at Bank of America. However, I think that patient long term investors will be rewarded when the economy rebounds.
Disclosure: I do own shares of Bank of America.
Photo by: taberandrew
4 Large Cap Stocks To Buy Now
July 5, 2010 By Leave a Comment
The current market decline has created a great opportunity for value investors. Long term investors do not have to chase speculative growth names because the market has put a lot of large cap U.S. companies on sale. There are a number of household names trading at less than 10 times earnings. Listed below are 4 companies that are selling at a discount to their intrinsic value.
Intel Corporation (INTC)
The recent Dow drop has turned Intel into an accidental high yielder. Intel trades just under 10 times next year’s earnings and has a dividend yield of 3.3%. Intel has a tremendous balance sheet as many tech bellwethers do. Intel has over $16 billion dollars in cash and just $2.5 billion dollars in debt. Intel is a great buy with tremendous free cash flow and an 11.5% earnings growth rate.
Corning (GLW)
Corning is probably the cheapest stock on the list. Shares trade at just 8 times next year’s earnings and the company has a projected growth rate of 11.6% over the next 5 years. Corning has a fortified balance sheet with almost $4 billion in cash and approximately $2 billion dollars in debt. Corning is a cash cow that generates significant operating cash flow. Shares trade just above 1.5 times book value.
Bank of America (BAC)
The nation’s most recognizable bank is trading at just 7 times next year’s earnings estimate. Bank of America has the earnings power to overcome any significant losses in its loan portfolio. The lax financial reform bill shows that the government is still backing the big banks. At just $13.70 a share, Bank of America is a buy.
General Electric (GE)
General Electric has fallen to buy territory again at under $14 a share. Long term investors are getting a great chance to buy a global franchise that trades at just 10 times forward earnings. Even with the dividend cut last year, GE is still yielding almost 3%.
Disclosure: I do own shares of Bank of America and General Electric.
The One Big Bank That You Never Hear About
June 28, 2010 By Leave a Comment
While Bank of America (BAC), JPMorgan Chase (JPM), and Wells Fargo (WFC) dominate the headlines, there is one large bank that just slowly continues to grow away from the limelight. That bank is US Bancorp (USB). US Bank took TARP funds just like the other big banks but unlike the other big banks has been able to escape the public backlash.
US Bank has been a longtime Buffet holding because of the company’s great management team and conservative approach to lending. The company’s management is a big reason why the banking giant’s loan portfolio has been outperforming that of its banking peers. It’s non performing loans percentage is much lower than Citigroup and Bank of America. US Bank is the 5th largest bank in the US based on asset size and US Bank has been quietly increasing its size by buying up failed banks over the past year. There have been continuous rumors that US Bancorp may acquire a larger regional bank to expand its operations.
US Bancorp has reported nearly two consecutive years of profitability. Last quarter’s earnings were very solid. USB had earnings of $648 million dollars and an EPS of 34 cents per share. Profitability increased 55% and total deposits increased almost 14%. The encouraging news was that consumer loan delinquency was decelerating even as the bank was increasing its reserves for loan losses. Investors should pay attention to the July 21st earnings release to see how US Bancorp’s sizeable commercial loan portfolio is holding up.
US Bank pays out a much higher dividend than its banking competitors. Shares of US Bancorp are not expensive but are not particularly cheap either at $23. Shares trade at 11 times forward earnings and 1.8 times book value.
