10 Most Undervalued Large Cap Stocks To Invest In

2. Bank of America Corp. (NYSE:BAC)

Forward Price-to-Earnings Ratio: 10.91

Number of Hedge Fund Holders: 92

Bank of America Corp. (NYSE:BAC) is one of the largest banks in the United States, offering a range of financial products and services, including commercial banking, retail banking, wealth management, and investment banking. It’s known for its extensive network of branches and ATMs across the country, making it a convenient choice for many customers. It’s focusing on technology and digital banking to improve customer experience and efficiency.

Bank of America Corp. (NYSE:BAC) struggles with high-interest costs, which jumped to $32.4 billion in the first half of 2023. As interest rates fall, the bank may see lower costs and higher growth in its investment banking and brokerage businesses. However, this also depends on the overall economic situation.

The company opened 278,000 new checking accounts in Q2 2024, bringing the total to 500,000 for the year. Its wealth management division added 6,100 new clients, and its commercial banking division added thousands of small businesses. It manages $5.7 trillion in customer money.

Overall, its revenue increased slightly in the second quarter. Fees grew by 6%, making up 46% of total revenue. Car and Service charge revenue also grew by 6%. 87% of customers are now using digital banking, which is important because 53% of sales were made digitally in the second quarter. Non-interest revenue grew significantly, with asset management fees up 14% and investment banking fees up 29%.

The company had strong earnings in Q2 because of higher interest rates. Although rising deposit costs affected consumer banking, their other businesses helped balance this out. The investment banking and capital markets division did well despite difficult market conditions. As the economy gets better, it should benefit from increased spending on credit cards, loans, and business borrowing. These factors together make it a great investment opportunity.

Diamond Hill Large Cap Strategy stated the following regarding Bank of America Corporation (NYSE:BAC) in its Q2 2024 investor letter:

“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.”