With shares of Bank of America (NYSE:BAC) trading at around $11.47, is BAC an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
Let’s get to the bad news first. Bank of America still hasn’t shed its awful image. Ever since buying Countrywide Financial in 2008, Bank of America has fought to improve its image. Even more important is that this led to selling mortgages to investors like Fannie Mae and Freddie Mac, which then led to billions of dollars in losses. Management has been despised over the past few years, and the customer service rating for Bank of America is now at an 11-year low. To make matters worse, the fiscal cliff is on the horizon, and it could bring significant pain to a company like Bank of America. That’s the bad news.
The good news holds more weight because it’s more forward looking. As we already know, the performance of the stock over the past year has been nothing short of phenomenal. If we can get through the fiscal cliff, then that trend should continue. Regardless of what happens on that front, Bank of America is making many wise decisions. Bank of America is now focused on taking care of all legal issues, selling off non-core operations, paring expenses, and getting back to lending. Despite the hatred for this company, that sounds like a company that’s making all the right moves and is headed in the right direction.
Now let’s take a look at some important numbers.