Question Most Asked in 2010: Should I Buy Bank of America Stocks?

Earnings per share and Net Income Analysis (10-K)

Like any other bank, Bank of America experienced a decline in its Net Income in 2008. Reported Net income for 2007 for the bank was $14,928 million and in 2008 it was $4008 million. This is one of the biggest declines in the history of banking. In 2009 however, it seems like the bank’s position improved. Even though the Net Income did not go up to almost $15 billion or any where close to it like in 2007, it did increase from $4008 million to about $6276 million. A lot of the improvement can be attributed to acquiring Merrill Lynch and become the world’s largest wealth management company.

Earnings per share reported as of December 2009 were -$0.29 down from $0.54. In 2007 EPS reported were $3.29. Some Analysts at Wall Street still hold a Buy position on the stock while some claim it to be the worst stock of 2010.

Recommendations

There are mixed reviews and buy/sell recommendations for Bank of America Stock. Horacio Marquez, a contributing editor at Money Morning, back in 2008 recommended buying BAC stock but after the bank revealed some troubled assets, which were initially not released in the press, the stock saw a major decline. Since then the bank has seen significant improvements but the stock is still well under the recommended entry price.

Jim Woods, a financial journalist who has monitored the economy and stocks for two decades also recommends buying Bank of America Stocks. He mentions in his article “Five Reasons to Buy Bank of America Stock” that analysts favor BAC and that the bank’s conditions in all units is improving are among other reasons to purchase the stock.

On the contrary, Christopher Barker,  a Motley Fool contributor, says that Bank of America may be one of the worst stock of 2010 and states credit risk and Federal Reserve’s plan of acquiring $1.25 trillion of mortgage-backed securities as two of the many reasons for the recommendation.

My Take on the Subject

The US economy, or for that matter the global economy, will not be back to a 100% or as good as it was pre-recession right away as some might like to think. But, we have seen a little growth since last year. I have been reading articles and have been following the financial markets.

Even though the economic times aren’t at its best, I see potential, in particular Bank of America for this report. I would invest in Bank of America with the assumption that it is experiencing growth this quarter and is expected to grow more by the September quarter.

(I do not hold any interest in Bank of America and my recommendations are solely my conclusions and based on my research and therefore assume no responsibility for any damages or losses incurred by anyone who acts upon my advice.)


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    • DKchowdhury
    • December 20th, 2011

    Bank is planning to agglomerate 10 shares to 1 shares like citi bank. So sell all BAC.

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