We recently published a list of the 11 Cheap NYSE Stocks to Invest in According to Hedge Funds. In this article, we are going to take a look at where Bank of America Corporation (NYSE:BAC) stands against other cheap NYSE stocks.
On March 26, Jack Caffrey of JPMorgan Asset Management provided an analysis of market trends in a discussion on CNBC’s ‘Squawk Box’. He emphasized diversified portfolios built around different exposures during periods of volatility. Caffrey believes in the importance of ‘time in the market’ over ‘timing the market’. He highlighted the difficulty in predicting when fear or euphoria will dominate, as some of the best market days follow extreme pessimism. Caffrey also discussed the October sell-offs in 2022 and 2023, where many strategists expected further market tests at levels like 3200 or 3300 on the S&P 500. However, instead of panic selling, the market experienced rebounds in 2023 and 2024. He observed that implied volatility reached the high 20s during recent corrections, but did not indicate widespread panic.
Caffrey also discussed how the MAG7 drives market trends. While these stocks led growth in early 2020, their momentum eventually faded. This led to corrections instead of broadening. Investors began exploring second and third derivative trades stemming from AI developments, such as increased electricity demand and improvements in natural gas markets. He noted that mean reversion often occurs when primary trades become well-understood and widely owned. He suggested that markets would likely be led by earnings rather than valuation. Caffrey acknowledged that while some stocks within the MAG7 have posted earnings growth that makes their valuations more reasonable, traders are increasingly seeking opportunities in overlooked sectors like energy and businesses benefiting from a weaker dollar. For instance, oil prices have remained down despite energy leading the market performance this year.
Stimulus measures in Europe are also shifting from monetary to fiscal policies, which creates additional opportunities for investors.
Our Methodology
We sifted through the Finviz stock screener to compile a list of the top NYSE-listed stocks. We then selected the 11 stocks with a forward P/E ratio under 15, as of April 8, that were also the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
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Bank of America Corporation (NYSE:BAC)
Forward P/E Ratio as of April 8: 9.62
Number of Hedge Fund Holders: 113
Bank of America Corporation (NYSE:BAC) offers financial products and services for individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments. It operates through four segments: Consumer Banking, Global Wealth & Investment Management (GWIM), Global Banking, and Global Markets.
In 2024, the company’s Consumer Banking division made $11 billion in revenue, which contributed 40% to the total earnings. With the addition of over 200,000 net new checking accounts, the division marked 6 years of growth. The company’s digital engagement was also strong, with over 14 billion logins and digital sales higher than 60% in Q4. The company’s AI-powered Erica platform surpassed 2.5 billion interactions in this quarter.
It’s investing in digital capabilities and maintaining disciplined deposit pricing for continued growth. On March 7, David George of Baird upgraded the company’s rating from Neutral to Outperform, while raising its price target from $45 to $50. As of now, Bank of America Corp. (NYSE:BAC) has a client base of 68 million, operates 3,900 branches, and 16,000 ATMs, and serves 56 million digital users.
Hardman Johnston Global Equity Strategy stated the following regarding Bank of America Corporation (NYSE:BAC) in its Q4 2024 investor letter:
“Bank of America Corporation (NYSE:BAC) is the second largest bank in the developed world and operates the third largest branch network in the US. With 86% of revenues coming from the US, the bank is a clear beneficiary of the lower regulatory environment expected from the incoming administration. The company’s business is highly diversified across retail, commercial, wealth management, and investment banking, with significant scale across all verticals. Management believes there is a big opportunity going forward in growing and monetizing its mass retail client base. Wealth is another huge opportunity, with the Merrill Lynch platform enabling customers to make more transactions and purchase additional products. Lastly, Bank of America has an opportunity to increase efficiency through cost reduction and online banking. Our expectation is for the bank’s ROE to move significantly higher, driving EPS growth and higher multiples.”
Overall, BAC ranks 3rd on our list of cheap NYSE stocks to invest in according to hedge funds. While we acknowledge the growth potential of BAC, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than BAC but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.