Wells Fargo & Co (WFC), Bank of America Corp (BAC): Bank Stocks Are Still Cheap After This Year’s Gains

However, where there is instability, there is more potential to make money when things start going right. The analysts covering the company seem to agree, and expect earnings to come back with a vengeance going forward. Bank of America Corp (NYSE:BAC) is expected to earn $0.93 per share this year, rising to $1.29 and $1.51 in 2014 and 2015, respectively.

Goldman Sachs: a different approach

An alternative way to play the banking sector is through investment banking, and my personal favorite in the space is Goldman Sachs Group, Inc. (NYSE:GS). Goldman Sachs not only made it through the financial crisis, but did well. In fact, 2009 was the company’s second most profitable year in their history! Warren Buffett called Goldman Sachs “a bet on brains” when he invested in the company about five years ago, and they seem to be able to make money no matter what the market is doing. Goldman Sachs Group, Inc. (NYSE:GS) trades at just 11.4 times this year’s earnings, which are projected to grow at 11% going forward.

Conclusion

Despite the recent gains in the sector, bank stocks still appear to be very cheap. While this industry is extremely dependent on the sustainability of the economic recovery in the U.S., which is far from certain, there could be big profits in the future for those who are willing to take the chance at this stage in the game.

Matthew Frankel has no position in any stocks mentioned. The Motley Fool recommends Bank of America Corp (NYSE:BAC), Goldman Sachs, and Wells Fargo & Co (NYSE:WFC). The Motley Fool owns shares of Bank of America and Wells Fargo.

The article Bank Stocks Are Still Cheap After This Year’s Gains originally appeared on Fool.com and is written by Matthew Frankel.

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