We have heard everything we hated to know about Bank of America (BAC) and it appears everyone loves to hate this stock and the bank itself. It has gone through just about everything the financial crisis has thrown its way, and it still made headlines when it announced it was going to charge for debit card use. It didn't seem to matter that most of the other big banks were already testing this strategy in limited markets, Bank of America got the headlines and consumer wrath.
I suppose they earned it just because of their home mortgage fiasco, purchasing of Countrywide when they couldn't afford lunch, and the bail out money that tax payers ponied up when they could have just vanished.
Well, the share price has reflected all of it, and probably overshot some, in my opinion.
1) Share price as of 11/19/2011: $5.78/share
2) Trading almost at its 52 week low of $5.13/share
3) A common share dividend of $.01/share payable to shareholders as of 12/02
4) Selling at less than 1/3 its BV
5) $34 billion in revenue as reported in the last 10q (up from $19 billion the previous quarter)
6) Net Income of $6.2 billion last quarter vs. a loss of $8.8 billion the previous quarter
7) Share accumulation from some very prominent investors (read the Barron's article)
Now I am not suggesting that anyone should bet the farm here, however it does have a compelling story of late as to why some people are accumulating shares at these prices. It's downsizing, and increasing margins, while its core business has improved. Even though it faces strong headwinds, they seem to be baked into the current price.
Whenever we take long hard looks at some really beaten up, awful stocks, we find some golden nuggets that suggest it might be worth some risk capital. Bank of America offers a reward for those who know the risks, and it could very well be quite significant capital appreciation.
Do your own research of course, and do not make any decisions without appropriate due diligence without outside influence, but I might be buying some myself before Thanksgiving.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in BAC over the next 72 hours.