Introduction
Things are finally looking up for Bank of America after passing the Fed stress test recently administered on US financial institutions. The Bank of America has been on a positive upward trend in the last few months experiencing consistent rise in its share value and some investors are quite bullish on the future of the Bank America stock. On the other hand, some analysts are still unsure about the bank and this has created a state of uncertainty amongst investors. The Bank America stock has rebounded almost 80% in the last 7 months after sinking to less than $5 in 2011. In the last 3 months alone, the share value has changed by 75.9%.
After the recent stress tests, which yield an adequate result for Bank America stock, the stock value rose to $10 for the first time in 7 months before finally settling at $9.53 due to speculations that the bank was planning to raise more capital through a secondary offering. But for a company that’s worth $137 billion and with analysts predicting that the stock price could hit the $30 or $40 range in the near future, investors are not ignoring the Bank America stock although some with faint hearts remain jittery. Here are few tips for the faint hearted investors on how you evaluate the stocks, invest with more certainty and make some good money when the US economy finally regains its momentum.
Step 1
Buy and Hold. Most analysts are now advising investors to buy but don’t sell. The Bank America stock price is expected to settle somewhere around $10 around the end of this year. Some analysts were even estimating as much as $13 shares value. Whatever, its final value, this is not the right time to sell.
Step 2
Watch the big investors: Watch which big investors are putting their money into the Bank America stock. If they are giving the stocks a vote of confidence, then why shouldn’t you? Some of the big investors who have placed their bets with the Bank of America in the recent months include the multi-billion dollar Fairholme Fund.
Step 3
Watch the US Housing market: Investors can also watch the housing market as an indicator on future profitability prospects for the Bank of America. As the housing market recovers and the economy strengthens, expect the Bank America stock to rise in value.
Tip 4
How will Bank of America handle foreclosures? Investors should watch some the strategic steps that the Bank of America is currently taking to clean up its balance sheets with view to increasing profitability. Currently, the bank is involved in negotiations with homeowners in foreclosures to turn over their deeds to the bank and in return negotiate and sign a rental agreement, at rental cost. These properties are currently liabilities to the bank but if they can generate revenues through such schemes, then this bode well for the future profitability of the bank and the performance of the Bank America stock.
Management changes: Finally, a final signal to watch in the coming year is the state of the management at the Bank of America. Any major management shakedowns at the bank of top executives will likely affect investor confidence in the bank and affect the Bank America stock.
