Bank of America Corp (BAC), Ford Motor Company (F): Kids Won’t Stay At Home; They Will Buy a Home

Bank of America Corp (NYSE:BAC) will be lending more money if the average selling price and demand for homes is on the rise. Therefore, investors have to position themselves in this under-loved, under-valued, asset-rich bank. The company was able to grow earnings due to falling costs in its lending business. The bank reported loan loss allowances decreasing from 3.61% in 2012 to 2.49% in 2013. The CEO of Bank of America Corp (NYSE:BAC) plans to increase earnings growth by cutting back costs an additional $8 billion through 2014.

The strong economic data, paired with increasing demand for durable goods along with declines in loan related losses, is driving the optimism analysts have towards this bank. The company is expected to grow earnings by 22.30% on average over the next 5 years.

Ford Motor Company (NYSE:F) is my favorite car company in terms of financial performance. The company has been able to grow revenues from $30.5 billion in the first quarter of 2012 to $33.85 billion in the first quarter of 2013. The 10.98% growth rate in revenues made up for the decline in operating margin from 6.4% in 2012 to 5.2% in 2013.

Ford Motor Company (NYSE:F)’s business was strongly supported by the economy. The company grew its market share position in the United States from 15.2% to 15.9% year-over-year in the first quarter of 2013. Analysts expect this trend to continue, with growth projected to be at 11.9% on average over the next 5 years.

Conclusion

Investing into automakers and the housing market would be a wise decision going forward. The economic indicators point to further strength. I anticipate the millennial generation to at some point follow a similar consumption patterns to older generations, and when they establish some stability in the labor force, household formations will be on the rise once again, which will boost economic growth.

Alexander Cho has no position in any stocks mentioned. The Motley Fool recommends Ford Motor Company (NYSE:F). The Motley Fool owns shares of Bank of America Corp (NYSE:BAC) and Ford Motor Company (NYSE:F).

The article Kids Won’t Stay At Home; They Will Buy a Home originally appeared on Fool.com.

Alexander 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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