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Old 10-05-2010, 11:30 AM   Nav to Top  #1
FollowMyAlpha
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Default Bank of America (BAC): 5 Reasons to be Bullish

1. Bank of America is a dominant player in the lucrative and resilient regions of the US. States such as California, Florida, and Texas have screamed money and business over the last century. These regions offered opportunity in the past and will again as strong growth is reignited with the end of the recession.

2. The acquisition of Merrill Lynch gave Bank of America the most premier wealth-management business in the US. With an “army-like force” of over 16,000 advisors these employees generate substantial revenue. This crown jewel holds a wide economic moat without question.

3. Only a small portion Bank of America’s roughly 8 million affluent customers use its in house wealth-management services. At this point the number stands at 1 in 10 or 10%. It could easily increase revenue by a good amount in this division by incentivizing more of its current checking account clients. As well, combined with ML’s advisory workforce there looks to be strong untapped opportunity.

4. Due to Bank of America’s substantial depository base this provides the firm with low-cost and a stable source of funding.

5. Over the long run return on equity (ROE) should continue to improve and some analysts are forecasting a number above 10%.

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Summary:

We have no official buy or sell position on Bank of America (BAC) but heavily encourage a positive discussion to see all points of view be they bullish, bearish, and or something else.
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