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Bank of America Corporation Message Board

  • nasa_rss nasa_rss Dec 22, 2012 11:24 AM Flag

    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.

    Sentiment: Hold

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