My guru strategies are agog over Bank of America(BAC Quote - Cramer on BAC - Stock Picks). Three give the stock ratings of 90% or more -- it's hard to get a stronger endorsement than that. If you didn't snap up shares when I wrote about the stock last May, I urge you to pay attention now.
The O'Shaughnessy Strategy
My strategy based on the writings of James P. O'Shaughnessy looks for large-cap stocks, and they don't come much larger than BofA's $214 billion. BofA's cash flow per share of $4.56 dwarfs the market mean of 32 cents.
BofA has 4 billion shares outstanding, far above the market average of 633 million shares.
BofA's trailing 12-month sales are $58.6 billion, more than three times the
S&P 500's mean of $17.7 billion and double the strategy's minimum multiple of 1.5.
BofA has a dividend yield of 4.3%, which puts it over the final hurdle -- it's among the 50 companies with the highest dividend yields that passed the first four screens.
The Lynch Strategy
My strategy based on the investment approach of Peter Lynch is also laughing all the way to this bank. BofA's EPS growth rate is 13.7%, based on the average of its three-, four- and five-year EPS growth rates, which earns it the Lynchian title of "true stalwart." True stalwarts can gain 30% to 50% in value over a two-year period if they can be purchased at an attractive price based on the P/E-to-growth ratio.
BofA's yield-adjusted P/E/G ratio is 0.63, well below the strategy's maximum of 1.0. Also required for a stalwart company is a positive EPS; BofA's is $4.04.
BofA's equity amounts to 8% of assets, which clears the strategy's minimum of 5% for financial services companies. The final yardstick for the Lynch strategy is return on assets, which measures a bank's profitability. BofA's ROA is 1.37%, north of the minimum of 1%.
John Reese
RSS
