Top picks 2013: Bank of America

This out-of-favor financial appears set for a long-term turnaround.

By TheStockAdvisors Dec 26, 2012 12:43PM
gettyBy Mike Cintolo, Cabot Top Ten Trader

My choice for a favorite stock in last year's Top Picks report was Lennar (LEN), which has since risen 96%. That selection stemmed from my belief that the housing sector was poised for a big turnaround. We now rate the stock a hold. We don't see anything wrong with Lennar,  but we also don't see lots of upside power at this point.

For 2013, I see another much-hated group ready to turn up — financials. That's why I'm making Bank of America (BAC) my pick for the coming year.

As a group, the big banks have now had five full years to shape up. They've been helped along by an incredibly easy Federal Reserve (now buying $40 billion of mortgage debt every month) and, ironically, a housing rebound, which has improved many firms' balance sheets.

And, though most investors don't know it, earnings for the group are buoyant.

As for Bank of America itself, it's likely to pass an upcoming stress test and finally be able to return $5 billion to $10 billion to shareholders through a dividend boost and share repurchases.

Throw in the fact that earnings are projected to leap 129% next year to 96 cents per share, and the fact that the stock actually hit new yearly highs in December (even as the market was struggling), and it's clear to me that the turnaround is underway.

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Tags: BACLEN
5Comments
Dec 26, 2012 4:36PM
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If they increased the dividend and came out with good earnings I wouldn`t be surprised

if it would double in a year.

Jan 8, 2013 3:09PM
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BOA has already rise more than 100% in 2012. 
Dec 26, 2012 2:04PM
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Wow... MSN pays you to write this crap? Lennar isn't going to make it. It's stock platform might but no builder has a chance for survival. 70 year olds sold suburban homes too high and then killed jobs for the immediate next two decade generations-- whose own homes are off at least 50% in values. To own stock in businesses that thrive on unsustaining sprawl is delusional. Now... Bank of America? No other bank gets trash-talked as much. NO Fed member bank has the trust of the people and has thrived only on false premises. 1 in 5 homes are in foreclosure, the bank rate and borrowing rates are below what can be sustained or serviced and these banks sell what they book to the Fed to get them off the hook! We aren't going anywhere on trickery and I wouldn't touch a platform or institutional stock if Bernanke himself gave me the cash. Expect trash stocks like these to be fully wiped out soon. We've gone up on fluff and are now at the ceiling. Balloons trapped at ceilings-- pop. Only idiots think otherwise. We want our economy back. When you can tell us about a stock rehiring experienced personnel at living wages while capping management that is miles out of proportion... let us know so we can buy in. Until then... articles like this one are pure BS. 
Dec 26, 2012 2:02PM
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Bank of America will not turn around young man ! B/A is the poster boy for what is wrong with the Financial system ! The (TBTF) bank has no respect for the middle class the young or the elderly! B/A motto Rape , Pillage and Plunder extract every penny from your low end customers ! This is a Criminal organization that considers itself ABOVE THE LAW and is not subject to any rule of law or regulations ! B/A will COLLAPSE and FAIL !     DIE BANK OF AMERICA  DIE   !!!!!!!!!!!!!
Dec 26, 2012 2:08PM
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DIE BANK OF AMERICA DIE  !!   A CRIMINAL ORGANIZATION OUT TO RAPE, PILLAGE AND PLUNDER THE MIDDLE CLASS THE ELDERLY AND THE YOUNG ! NO RESPECT FOR IT'S LOW END CUSTOMERS=SCREW THEM EVERY WAY YOU CAN ! LOUSY STOCK PICK FOR 2013 MIKE.    ! B/A WILL COLLAPSE AND FAIL  !

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