Bank of America (BAC-N)

Likes US financials. Quietly up ~49% last 12 months. Just watch that's it's coming up to potential resistance around $50, which it hit in early 2022. If it breaks above, great sign; but might also bounce down below it. He owns GS. 

See his Top Picks.

Loves the money-centre banks. Not quite as expensive as JPM, but more interest-rate sensitive. A gently falling interest-rate environment (which he thinks will come to pass, though it's up for debate), net interest margins will widen and that's traditionally good for banks. Capital markets business has really built up, and will open up post-Biden. Economy in pretty good shape. Undemanding valuation. Yield is 2.3%.

Very good company with excellent prospects. Owns shares in the company. Believes banking stocks will continue to lead market. Deregulation from President Trump will allow company to generate new profits. New Crypto developments will also provide catalysts for growth. 

The "too big to fail" banks have had strong recent earnings. US economy is doing quite well right now, benefiting from lots of tailwinds, new US president is pro-business. This position makes sense.

Whether to trim is more a question of portfolio weighting. Look at the money in your overall portfolio and in BAC specifically. If that position is over 5%, or 7% on its way to 10%, then maybe trim down to 2-3%. That way, if things reverse and the price comes down, it won't have an impact on your overall portfolio.

They just reported a modest revenue beat and strong earnings beat. All 4 segments grew, though cost controls were merely okay at a modest beat. Expense guidance was merely in-line. BAC is doing fine, not great like its peers.

Growth, but a lot less than Citi. The banks each take their turn to shine, and you want to buy them at different times.

There will be only 2 rate cuts next year, not 3 or 4. Adjust your expectations. So, this stock is fairly valued, though buy under $40.

Incredibly well run. Better opportunities than others because it has other businesses that don't rely on interest rates, such as credit cards and investment banking. Bigger and better than others, able to do more M&A as well.

Whether to take gains is a function of percentage in your portfolio. 5% is OK, but if 10% or more think about taking some off the table. Too big to fail. Exceptional job cost-cutting. May be trending toward deregulation, so US domestic banks would be more shielded.

Was upgraded today. Because of Merrill Lynch, BAC now has scale--that theme is finally working.

He added more last week. Is puzzled by a downgrade today. Trades at 1x book and run by a great CEO. Capital markets will open up and benefit them.

They report tomorrow. He wants to hear the latest about credit card and lending as rates have come down. Also, will watch for housing.

They report tomorrow. Earnings are often predictable, though you don't know what he trading and investment activity will be for GS. He expects earnings to be robust and the messaging positive. For GS he also wants to hear about their foray into retail, though this is absorbed in the stock price. BAC's retail operation has been successful, and he wants to hear about credit delinquencies given that consumer debt is at all-time highs. He expects more of the same from these two banks.

Likes the money-centre banks like this one, as well as the investment-centred banks. US economy is improving. 12x PE, not expensive. 13-15% earnings growth for 2025 and 2026. Decent dividend of 2.6%, has grown by 9% a year over last 5 years. This is a more conservative play than banks like GS or MS.

We're into an easing cycle on rates. What's working in the market are early cycle companies, rather than late cycle. Likes financial services in general. Buffett's sold some BAC, but he's been raising cash for quite some time now, and there's some question as to why -- transition planning, unenchanted with the stock, or something else?

His top choice is JPM, one of his top 5 holdings. You'll be OK with BAC -- market's OK, as is the sector. Getting paid well, with probably high single-digit dividend growth. Stay with it.