Equities

BANK OF AMERICA (BAC) — MARKET ANALYSIS

Bank of America

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Bank of America is one of the oldest still functioning financial institutions in the United States. It was first established as “The Bank of Italy” out in San Francisco in the early 1900s. Later on was converted to Bank of America. Today its headquarters are located in Charlotte, North Caroline.

The bank is popular among the everyday consumers with its various financial services ranging from regular checking and saving accounts, credit and mortgage lines to wealth management. The merger between Bank of America and Merrill Lynch – the world’s largest retail brokerage — back in 2008 significantly improved the bank’s portfolio. The merger cost $50 billion and by the end of the second quarter of 2019 the estimated net income totaled at $7.35 billion with revenue of $23.08 billion.

Bank of America Merrill Lynch takes pride in growing consumer base while also keeping itself steady on the market, even in tough times such as the present COVID-19 pandemic.

If we look at the historical market data for BAC for the full year 2019, we see that on average BAC shares traded, on opening, for $30. This has been kept steady until mid-March 2020. Currently BAC shares are trading, on average, between the low and mid $20 value. While other publicly trading companies have been experiencing huge gaps between their “highs” and “lows”, Bank of America continues to keep his head above the water during uncertain times.

The most pressing question investors ask themselves today is whether the BAC shares will reach their past or higher values once the pandemic is over or not? Could they reach $50 per share?

It is my personal believe that investors will see BAC shares reach that number. We will start seeing the growth in cost as early as June. Once the social restrictions caused by COVID-19 start to be lifted, the economy will slowly start to dust off and get back on its feet. People will return to work. Whether they transition back to the office environment or embark on new employment, money circulation will be back and the economy will be revitalized. The SBA loans most small businesses obtained under the Covid-19 stimulus package will have to be repaid. Starting in fall, interest rates will once again be charged on mortgage, credit and student loans.

Looking various charts we see how exactly a year ago Bank of America shares kept a steady trading value. The only really noticeable exception we saw was around mid-March and early June 2019. This is typical for most businesses. Seems like spring is the season for change in company management and strategy reconstruction. From consumer point of view, March is almost never a highly purchasing month, nor is it the best time to make major decisions, such as home or auto purchases. The months of April, May, July, August, November and December are the months continuously being reported by retailers as most profitable. Perhaps it has something to do with the respective holidays in each of those months, the summer mood, using that holiday time or spending the bonus checks.

What the future holds for BAC investors we will start seeing in June. The market trading history has taught us that quick decisions caused by fear, panic or stress don’t correspond with the way the market moves. Logical mind, common sense, patience and consistency is what the market likes. If we go back 10 years of BAC stock history, we will see that’s what the company has done too and that’s what still keeps them afloat.

 

 

SOURCES USED


[1] https://markets.businessinsider.com/news/stocks/bank-of-america-baml-second-quarter-earnings-q2-2019-7-1028360002

[2] https://finance.yahoo.com/quote/BAC/history?p=BAC

[3] https://finance.yahoo.com/quote/BAC/chart?p=BAC#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%3D

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