The price of BAC has kept dropping since the day I bought it. In fact, I was very unlucky to have bought it just before it announced its third quarter losses. I have been holding the stock for almost 6 months now, and am staring at a nearly 30% loss. So, do I cut loss? Never. Because I believe in the American Recovery.
An article taken from the Street:
Bank of America had a noisy third quarter, as the company posted a net loss of $7.3 billion, or 77 cents a share, resulting from a non-cash goodwill impairment charge of $10.4 billion at its FIA Card Services subsidiary. This placed a drag on third-quarter earnings for the entire banking sector according to the Federal Deposit Insurance Corp., but excluding the goodwill charge - which didn't eat into investor capital - the company would have earned $3.1 billion, or 27 cents a share, declining slightly from the previous quarter. Bank of America's shares were trading for 0.9 times tangible book value as of Tuesday's market close, which is a very low level for a company with such a national presence, including Merrill Lynch and Countrywide's mortgage business. Surely the nation's largest bank, which will have tremendous earnings power when the economic recovery eventually picks up steam, is worth more than its liquidation value. Analysts concur, with 17 out of 25 analysts covering the company rating its shares a buy, while the other analysts all have hold ratings. Based on the median price target of $18 among analysts polled by Thomson Reuters, the shares have 62% upside potential from Tuesday's closing price of $11.09. However, most of the analyst targets are for 12 months, which really isn't that long-term an outlook. An investor confident in the eventual economic recovery who is willing to go in for several years, might be in for a fat triple-digit return.
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