Bank of America Corp (BAC) Stock Fall is a Result of Fears — Fear that Should Indicate a Chance to Buy, Not Sell

Share
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  

Bank of America Corp (NYSE:BAC) is one of those companies that won’t be going anywhere anytime soon. However, with fears of a recession, and the downturn in the price of oil, many investors are becoming fearful of the banking stock, causing them to sell at prices significantly lower than they were just weeks ago. While the stock is up today, we ponder if this is a good time to jump back onboard.

There was a great article published today concerning Bank of America Corp(NYSE:BAC) stock, and how Warren Buffett made a killing by investing into it when everyone else was fearful. If Buffett has one strategy that stands out among his many, it would probably be to “be fearful when others are greedy and greedy when others are fearful.”. This is exactly how he acted back in 2011 when he invested a boatload of cash into Bank of America.

Now fear has returned and investors are scared of what could come of Bank of America Corp (NYSE:BAC) stock. As the price has been driven down heavily, more and more investors are becoming fearful. This causes more and more investors to begin selling the stock. In reality though, it won’t be going down to $0, at least not unless something more significant than we’ve ever seen in this economy happens. If you were to ask Warren Buffett if this is a time to sell the stock, I can assure you he would suggest the opposite. Right now may just be the perfect time to buy shares at a discounted price. The stock is up 2.72% or $0.32 following the news, hitting $12.27 per share. About 124.88M shares traded hands. BAC has declined 28.44% since July 10, 2015 and is downtrending. It has underperformed the S&P500 by 18.24%.

From a total of 19 analysts covering Bank of America (NYSE:BAC) stock, 14 rate it a “Buy”, 0 a “Sell”, and 5 a “Hold”. This means that 74% of the ratings are positive. The highest target price is $21 while the lowest target price is $15. The mean of all analyst targets is $18.62 which is 51.75% above today’s ($12.27) stock price. Bank of America was the topic of 35 analyst reports since July 21, 2015 according to the firm StockzIntelligence Inc. CLSA upgraded shares on January 29 to a “Outperform” rating. Robert W. Baird upgraded shares to a”Neutral” rating and a $18.0 target share price in their report from an August 25. Deutsche Bank maintained BAC stock in a recent report from January 26 with a “Buy” rating. Bernstein upgraded the rating on August 25. Bernstein has a “Mkt Perform” rating and a $19.0 price target on shares. Finally, Jefferies maintained the stock with a “Buy” rating in a report they issued on an October 7.

The institutional sentiment increased to 1.33 in Q2 2015. It’s up 0.32, from 1.01 in 2015Q2. The ratio improved, as 82 funds sold all their Bank of America Corp shares they owned while 453 reduced their positions. 122 funds bought stakes while 590 increased their total positions. Institutions now own 6.30 billion shares which is 0.74% less than the previous share count of 6.35 billion in 2015Q2.

Mizuho Bank Ltd. holds 56.87% of its total portfolio in Bank of America Corp, equating to 31.25 million shares. Boyle Capital Management Llc owns 1.88 million shares representing 38.47% of their total US portfolio. Moreover, Daily Journal Corp has 28.98% of their total portfolio invested in the company, equating to 2.30 million shares. The Netherlands-based Rabobank Nederland Fi has a total of 27.83% of their portfolio invested in the stock. First Trust Bank Ltd., a Bahamas-based fund reported 380,720 shares owned.

Bank of America Corporation is a bank holding firm and a financial holding company. The company has a market cap of $136.86 billion. The Firm is a financial institution, serving individual consumers, small- and middle-market businesses, institutional investors, firms and Governments with a range of banking, investing, asset management and other financial and risk management services and products. It has 9.52 P/E ratio. Through its banking and various nonbank subsidiaries, it provides a range of banking and nonbank financial services and products.