Bank of America (NYSE:BAC) has been heavily penalized year to date primarily due to the reduced expectations about Fed rate actions with weaker economic outlook and perceived risks to the energy industry.
The stock has fallen by 23% since the beginning of this year while the financial sector ETF (NYSEARCA:XLF) has been only down by 7%, indicating that it has been a high beta stock with a negative return. The question is now whether we will be able see similar action from BofA when the market bounces back.
Despite the current pessimism, I still believe that there is significant upside potential for BofA and it could emerge as an outperformer in the mid-term.
Summary
I believe that macro level concerns over the banking stocks have been overplayed.
Bank of America has some features which distinguish from other banks such as the plenty of room for efficiency improvement.
After a long period of underperformance BofA is an attractive investment with relatively cheap multiple
The stock has fallen by 23% since the beginning of this year while the financial sector ETF (NYSEARCA:XLF) has been only down by 7%, indicating that it has been a high beta stock with a negative return. The question is now whether we will be able see similar action from BofA when the market bounces back.
Despite the current pessimism, I still believe that there is significant upside potential for BofA and it could emerge as an outperformer in the mid-term.
Summary
I believe that macro level concerns over the banking stocks have been overplayed.
Bank of America has some features which distinguish from other banks such as the plenty of room for efficiency improvement.
After a long period of underperformance BofA is an attractive investment with relatively cheap multiple
