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Stock of the Month: Bank Of America (BAC)

Written by Donnie Nguyen

November 18, 2020

Bank of America (NYSE: BAC) is the November stock of the month. With promising news of a coronavirus vaccine, the theme lately has been about the “reopening stocks”. As I scrutinized stock of the month candidates that will benefit the most from the vaccine, it was difficult to find any whose stock prices were still reasonably priced.

Bank of America stock fits the bill. As of Monday’s close (11/16/2020), BAC stock closed at $27.58, down 22.8% from its 52-week high of $35.72.

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This is the second time I’ve chosen Bank of America as the stock of the month. The first time was here, before the pandemic. For a list of all of our past picks and results, go here.

In this video, I first discuss five reasons to buy BAC stock now. Second, I discuss some of the risks. Third, I give my five-year return on investment analysis including dividends. And finally, I share my game plan for investing in Bank of America stock.

NOTE: This article was originally published on November 16, 2020. The article was updated on November 18, 2020, to add the video.

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KEY STATS (AS OF 11/16/2020)

Share Price: $27.58

Share Outstanding (from 10Q): 8,650,789,694

Market Cap: $238.6B

Net interest income (Q3 2020): $10.129B

Net interest income growth (yoy): -16.9%

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Non interest income (Q3 2020): $10.207B

Non interest income growth (yoy): -3.9%

Nonperforming loans and leases/Total loans and leases (Q3 2020): 0.48%

Revenue (Q3 2020): $20.336B

Revenue Growth (yoy): -10.8%

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Net Income (Q3 2020): $4.9B

Diluted EPS (Q3 2020): $0.51

Diluted EPS Growth (yoy): -8.9%

Provision for credit losses: $1.389B

Efficiency ratio: 70.81%

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M1Finance.com

Book value per share: $28.33

Tangible book value per share: $20.23

SHOULD I BUY THIS STOCK?

Bank of America stock could be a good addition to a portfolio that wants exposure to:

  • Financial Sector
  • Bank Stocks
  • Large Cap Value Stocks

Be sure to do your own research and determine if BAC stock is a good stock for your portfolio.

HOW MUCH OF THIS STOCK SHOULD I BUY?

Here are some portfolio guidelines we Wolves try to live by:

  • Thou shalt not hold more than 35% in any one particular sector
  • Thou shalt not invest more than 10% of principal into one individual stock
  • Thou shalt make small purchases. The general rule of thumb is to spend no more than 2% of your portfolio on a single purchase and build up your position over time.

These portfolio guidelines have helped me tremendously through my 20+ years of investing.

BOTTOM LINE

Bank of America is a very well-run global bank that could be undervalued at its current price. It pays a good dividend, which looks safe. It could be a big winner post-pandemic.

So what do you think about Bank of America stock? Let me know in the comments section.

Disclosure

I/we have stock (or options) positions in BAC, BRK.B, PFE

Except for Wolves of Investing, I/we are not receiving any compensation from and do not have any business dealings with any companies whose stocks are discussed in this article.

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Donnie Nguyen

Donnie Nguyen

Donnie Nguyen is the founder and CEO of Wolves of Investing. He started investing in the stock market in the early 2000s. He follows the teachings of Peter Lynch, Warren Buffett, and other investing legends. When he's not investing or blogging, he loves spending time with his family traveling and experiencing the world.

Follow Donnie on Facebook and Twitter!

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