The price of Bank of America Corporation (NYSE: BAC) has advanced from $18.08 above $28 in less than six months and the current price stands around $24. The next several months will be competitive for the banking industry but even with the COVID-19 pandemic, the business of Bank of America is going very well.Fundamental analysis: Bank of America is a stable bank with a good position on the market
Bank of America is an American multinational investment bank and financial services holding company. Bank of America is one of the „Big Four“ banking institutions of the United States and it services approximately 10.73% of all American bank deposits. When trading this stock, investors should have in mind that Bank of America is a stable bank with a good position on the market.
Bank of America decreased its revenue in 2019 to $85.58B from $88.46B in 2018 but the growth projects will ensure that the numbers will be moving up in the future. If we compare total stockholders’ equity of $265B and the market capitalization of $212B, we can notice that this stock is not overvalued.
Another useful information for potential investors is that this company has paid more than $18B dividends to its shareholders in the last three years and this number can be even bigger in the future.
There are also some obvious risks when it comes to buying Bank of America stock and there are several negative facts that are connected with this bank. The bank’s net income in the second quarter came in significantly lower than in the same quarter last year.
CEO Brian Moynihan said recently that he sees net interest income declining $600M-$700M in Q3. The U.S. central bank made the announcement recently that will extend its caps on banks’ dividend for the rest of the year due to heightened economic uncertainty. The main reason for this is the Covid-19 pandemic but once the situation has stabilized, the price of this stock will be at much higher levels.
My opinion is that this stock could be a good long-term investment but maybe now is not the best time to invest in Bank of America shares because the price could weaken even more in the upcoming weeks.Technical analysis: The price could weaken even more in the upcoming weeks
When trading Bank of America, you should have in mind that the price could weaken even more in the upcoming weeks.Data source: tradingview.com
On this chart, I marked important resistance and support levels. The important support levels are $22 and $20, $28 and $30 represent the resistance levels. If the price jumps above $28 it would be a signal to buy this stock and we have the open way to $30.
Rising above $30 supports the continuation of the bullish trend and the next price target could be located around $35. On the other side, if the price falls below $22 it would be a “sell” signal and we have the open way to $20.Summary
This stock could be a good long-term investment but maybe now is not the best time for buying Bank of America shares because the price could weaken even more in the upcoming weeks. There are some obvious risks when it comes to buying Bank of America stock currently but if the price jumps above $28 it would be a signal to buy this stock and we have the open way to $30.
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