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The Banks: Our Past SA Articles on Bank of America & J.P. Morgan Chase

Bank Of America: A Good Time To Buy

  • Improving economy and housing data to benefit bank’s loan book and asset quality.
  • Convincing results, positive earnings guidance, and attractive P/BV make BAC a good buy.
  • Likely rate hike to benefit BAC in 2016.
I believe that the inflection point has arrived for Bank of America (NYSE:BAC). The recent results have been quite convincing making me bullish on the stock. In the latest Q3'15 results, the bank reported net income of $4.5 billion (v/s loss of $232mn in Q3'14), resulting in EPS of $0.36 on a diluted basis. Basel 3 Tier 1 ratio under advanced approach rose to 9.7%, up 40bps. The Bank's Tangible Book Value per share rose to $15.50, up 10% per share and Book Value per share rose to $22.41, up 7% yoy. Bank of America traditionally trades for close to 2x tangible book value. The stock is currently trading at 1.01 times tangible book implying that the bank will never grow earnings, an assertion that I find ludicrous. I believe the upside potential is vast with a good margin of safety as well. I expect the stock price to reach $20 from the present $16.20 (as of writing) in 5-6 months... READ MORE

Bank of America and J.P. Morgan Chase are luckily not behind a vault for investors.

Less Interest Revenue Contribution Helping JPMorgan Outperform

  • JPMorgan’s stock performance has been leading the financial sector.
  • The firm appears to be emerging as one of the banking sector’s top stocks in the current environment.
  • JPMorgan has significantly lower revenue generated from net interest than its peers.
  • The bank has overcome nearly all of its regulatory issues and the Consumer and Community Banking segment is outpacing its competitors.
  • Given the positive outlook, now is an opportune time for investors to buy JPMorgan.

JPMorgan's (NYSE:JPM) stock performance has been leading the financial sector as the firm appears to be emerging as one of the banking sector's top stocks in the current environment. Year-to-date its stock has fallen much less than its banking peers and it is also ahead of the Dow Jones Industrial Average by 2.34%.

The main reason - JPM is much more diversified than its banking peers that have high levels of revenue tied to net interest. JPMorgan posted strong revenue growth in its leading business segment, Consumer and Community Banking, in the second quarter. Also, while having less of a net interest piece, its net interest revenue contribution is still substantial enough to see a significant revenue jump when interest rates do rise... READ MORE

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