1) Bank of America Corporation (NYSE:BAC)
Forward P/E Ratio as of 8 November: 12.3x
Number of Hedge Fund Holders: 92
Bank of America Corporation (NYSE:BAC) offers banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments worldwide.
Market experts believe that Bank of America Corporation (NYSE:BAC)’s focus on technological innovation and strong investments in technology should continue to act as a growth catalyst. Its commitment to innovation resulted in a 94% increase in AI and ML-granted patents and pending patent applications since 2022. Bank of America Corporation (NYSE:BAC) has ~1,100 AI and ML patents and pending applications in its portfolio, with over half having already been granted. The company spends more than $12 billion annually on technology. Of this, ~$4 billion will be focused on new technology initiatives in 2024.
Wall Street believes that its strong, low-cost deposit base, together with a diversified business model throughout retail, commercial, and investment banking, are some of its key strengths. Bank of America Corporation (NYSE:BAC)’s strategic positioning stems from its ability to garner deposits and leverage this growth with loans, which should fuel stronger long-term earnings growth.
Furthermore, the company’s strong deposit franchise enables it to enhance its market share. This can result in increased deposit growth, offering additional low-cost funding for loan growth or securities investments, further enhancing Bank of America Corporation (NYSE:BAC)’s earnings potential. The bank’s healthy position in capital markets and wealth management provides significant upside potential. As and when there is an improvement in market conditions, Bank of America Corporation (NYSE:BAC) might see significant growth in investment banking fees, trading revenues, and asset management income.
Barclays increased its price target on the company’s shares from $49.00 to $53.00, giving an “Overweight” rating on 16th October. Diamond Hill Capital, an investment management company, released its Q2 2024 investor letter. Here is what the fund said:
“Other top contributors in Q2 included Bank of America Corporation (NYSE:BAC) and Extra Space Storage. Shares of financial services company Bank of America rose in the quarter as it looks increasingly likely net interest income will inflect and begin growing again in 2024’s back half and into 2025.”
While we acknowledge the potential of BAC as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than BAC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and investors. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
