Cash out on BAC? | TigerDroppings.com

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ShreveportTIGER318
Texas A&M Fan
Shreveport/Washington, D.C.
Member since Apr 2008
2723 posts

Cash out on BAC?


I bought BAC in November of 2011 for $5.78 a share. It is trading at a little over $12 now. I didn't buy a lot and just used what cash I had on hand in my brokerage account. I have no reason to sell to get any cash and a guy was on CNBC this morning saying that he thinks it will go to $30 over the next two years.

Given the fact that I am up about 95%, but I don't have a lot of money in it...would you all sell or hold?

*Also, I have it set to reinvest dividends, but their dividends have been tiny.







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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
80599 posts
 Online 

re: Cash out on BAC?


quote:

I have no reason to sell

quote:

hold


quote:

their dividends have been tiny.

There are indications they will soon apply to the Fed for permission to raise their dividend.



This post was edited on 3/7 at 10:31 am


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gatorsimz
Florida Fan
cafe risque
Member since Feb 2009
5378 posts

re: Cash out on BAC?


BAC's PE multiple is around 50x. its sector average is around 15x. that multiple would give me a little concern





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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
80599 posts
 Online 

re: Cash out on BAC?


quote:

BAC's PE multiple is around 50x.
That's the trailing P/E.

Forward P/E is 9.45.

ETA: Full disclosure, I don't own BAC.



This post was edited on 3/7 at 10:56 am


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ThatsAFactJack
Broussard
Member since Sep 2012
410 posts
 Online 

re: Cash out on BAC?


quote:

LSURussian


LSURussian,

I ready this board regularly and you seem to be one of the more well informed in regards to investing. I want to start investing some cash on my on seperate from my 401k and emergency fund. What site do you recommend to use, Etrade, Sharebuilder, etc? And can you recommend a few stocks that pay dividends that are under $100 a share.

TIA






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BigTyminLSU
LSU Fan
Member since Sep 2011
616 posts

re: Cash out on BAC?


I just bought some BAC at the low 11s. I'll be holding for a while. I heard Warren Buffet is all over BAC too. That guy knows what he's doing.





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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
80599 posts
 Online 

re: Cash out on BAC?


Thanks for the kind words but I'm an amateur compared to others on this board when it comes to analyzing stocks.

I use Charles Schwab but not their website. I downloaded their trading platform called "StreetSmart Edge" which is free, btw. I have all of my stock brokerage accounts with Schwab, which is a requirement to use their StreetSmart software.

It provides a LOT (more than I can use) of realt-time data on stocks and options.

quote:

And can you recommend a few stocks that pay dividends that are under $100 a share.
I don't recommend any specific stocks. And that follows board rules which protects posters from being suckered by someone doing a pump and dump scam.

You can screen stocks for yourself using the Yahoo Finance page (among others which do the same thing).

You can set certain parameters for your screening process such as minimum ROE, minimum market cap, stock price and dividend levels. It will then give you a list of all the companies which meet all of your screening criteria. Then it's up to you to research the listed companies individually.

Sorry I'm not being more helpful.






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LSUTOM07
LSU Fan
Baton Rouge
Member since Dec 2011
479 posts

re: Cash out on BAC?


quote:

Warren Buffet


quote:

That guy knows what he's doing


You don't say...






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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
80599 posts
 Online 

re: Cash out on BAC?


quote:

I heard Warren Buffet is all over BAC too.

He made a five billion dollar investment in BAC during their dark days when some people thought BAC might go bankrupt as a result of their Country Wide Mortgage acquisition and portfolio of sour house loans.

Under the terms of the deal, Berkshire bought $5 billion of preferred stock that pay a 6 percent annual dividend, and receive warrants for 700 million shares that it can exercise over the next 10 years. Bank of America has the option to buy back the preferred shares at any time for a 5 percent premium.

When you hear Uncle Warren talk up BAC don't doubt the fact that he may be interested in protecting his investment....

ETA: Based on today's price of BAC stock, Berkshire's warrants give the $5 billion investment a profit of about $3.5 billion excluding the 6% dividend on the preferred stock. Not a bad return after 2 years.



This post was edited on 3/7 at 11:37 am


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gatorsimz
Florida Fan
cafe risque
Member since Feb 2009
5378 posts

re: Cash out on BAC?


quote:

That's the trailing P/E.


I used the ttm PE to suggest the stock does not have much value. Its PE is at around 50 now and eps is at .24 so the price is hovering around $12/share. BAC needs to continue to increase earnings to justify that price. I think hold is a good call, I wouldn't suggest buying.



This post was edited on 3/7 at 1:45 pm


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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
80599 posts
 Online 

re: Cash out on BAC?


quote:

Its PE is at around 50 now
Again that's the trailing PE.

Using the trailing PE as an important investment metric is like driving your car on the interstate by only looking in the rear view mirror. It might be interesting but it can get you killed.






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slackster
LSU Fan
Houston
Member since Mar 2009
6121 posts

re: Cash out on BAC?


quote:

I heard Warren Buffet is all over BAC too.


Young Warren Buffet was a magician. Old Warren Buffet gets sweetheart deals of which you and I could only dream.

I'm not knocking Buffet, but he really can't make a bad bet now. Wherever he goes, people follow, and profits for him are not far behind. It has become a self fulfilling prophecy.






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matthew25
Ole Miss Fan
Member since Jun 2012
3367 posts

re: Cash out on BAC?


OP, if you feel hesitant, I suggest you sell 1/2 of shares.

Disclosure: I bought at 25 or higher, watched it drop to 3. I expect it to get back to at least 20.

Put the money on Regions (RF) which is finally looking good !



This post was edited on 3/8 at 1:33 am


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