A Better Option Than Bank of America Corp (BAC)?

According to the chart above, it would seem as though Citigroup Inc (NYSE:C) and Bank of America Corp (NYSE:BAC) are better options than Wells Fargo & Co (NYSE:WFC). However, that’s not necessarily the case.

The stock price performance chart below proves that Wells Fargo & Co (NYSE:WFC) has been the safest as well as most profitable investment over the long haul.

C data by YCharts

Are you wondering about valuation and dividend yield?

Conclusion

Bank of America is riding the wave of a housing rebound, but is it really a rebound? Increasing home prices would indicate yes. However, much of the run-up in home prices has been due to speculative investments fueled by low interest rates. We have been down this road once before, and it didn’t end well.

Many insiders and analysts state that rising interest rates are good for the banks. Improving net interest margin translates to increased profits. But what if there isn’t as much to profit on? With interest rates gradually increasing, it’s only a matter of time before the supply and demand picture in housing skews to oversupply and decreased demand. This will be a net negative for Bank of America.

All that said, bull markets have a mind of their own, and they often last longer than analysts expect. Even if the fundamentals don’t add up, the market will find a way to continue its ascent. Therefore, more upside potential for Bank of America Corp (NYSE:BAC) is likely. On the other hand, Wells Fargo looks to be the better long-term option. It offers the best valuation, the highest yield, and it’s likely to be the safest option if the market heads south.

The article A Better Option Than Bank of America? originally appeared on Fool.com and is written by Dan Moskowitz.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup Inc (NYSE:C), and Wells Fargo. Dan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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