BAC should be between $33.81 and $38.59 by Dec/2015
BAC, was the best stock in 2012 why?
It has fallen too much in the prior years and simply had been selling at panic levels. Stocks are on average fairly valued but due to panics either up or down they overshoot their True Intrinsic Value.
BAC, CEO has stated he expects the bank to earn $30-$40 billion after the housing meltdown is finally cleaned up (in 2-3 years). He expects mid 2015, that means he probably believes Dec/2014 and is just being slightly conservative. People will argue that banks cannot make money, the truth is they have to make money afterall who is going to lend FedEx 100 million to expand or any other company. Banks have been around for thousands of years and even in the time of ancient Greece it was known that to have a strong economic system you have to have strong (prosperous) banks. Who cares about Obama or Europe, those issues are short term in fact Obama becomes a lame Duck in just 3 more years then he is done.
Thus, the CEO's estimate of up to $40 billion in profits we will assume $32 billion after taxes (even though DVA will greatly reduce taxes for years) divided by 10.78 billion = $2.97 eps X P/E 13 = $38.59 price of stock in Dec/2015.
Current Book Value of $20.40 add $1 book value profit for 2013, add $1.25 for 2014, and add $1.50 for 2015 = BV in 2015 = $24.15 ($20.40 + $1 + $1.25 + $1.50). Conservatively the book value multiple is 1.4 X BV $24.15 = $33.81 end of 2015.
Thus in Dec/2015 conservatively speaking I expect somewhere between $33.81 and $38.59 a share! However, if the banks become popular as an investment BAC can be $50 by that time. All is my opinon.
Also, forget Trends and short term investing and everything else the simple matter is over the long run BAC will be worth its earnings as described above. This is how you make money.
I am a True Stock Investor, I spend hundreds of hours analyzing a stock before and I know what it be worth over a specific period of time before I ever buy it. I buy all in on FULL MARGIN just BAC. BAC is the simplest stock I have ever analyzed after it survived the close call with Bankruptcy. After that, it had huge profits but those profits did not fall down to the bottom line due to heavy mortgage losses. However, those mortgage losses are due to a once in a lifetime real estate meltdown that WILL completely go away in a few more years. That means a huge profit drops down to the bottom line and becomes a huge net profit.
There are no serious new competitors since all of the new finance regulations are keeping other companies from competing. In fact, 14% of smaller banks have folded in the past 5 years due to their inability to meet new finance rules and regulations whereas the big banks have economies of scale and can meet all rules. Thus less compeition for the big banks now than in the past!
What in the heck is everyone thinking? BAC has been a once in a lifetime buy for me and I will NEVER EVER SELL. I will take the dividends every year, as they get bigger and bigger and simply live a luxurious lifestyle. Thanks Obama for scaring the banks into record setting low's and allowed me to get in at $6.66 (I call it the devils stock) with every pennin I had in the world plus FULL MARGIN.