I know most people don’t like it when the price of stocks fall, but I find it provides clarity when searching profitable large-caps that are selling at obviously cheap valuations. Bank of America fell almost 5% in Monday’s trading as there have been increased fears over the commercial lending to upstream oil firms on the bank’s books.
Specifically, Bank of America disclosed that it would lose around $700 million from its upstream oil portfolio this year if oil stays around $30 per barrel through the third quarter of 2016. Bank of America is running a $890 billion loan portfolio, and $21 billion consists of loans to firms in the oil and natural gas exploration fields.
The stock is now at $12 per share, a price it saw back in 2010 when it was losing $2.2 billion per year. Now, the beaten down valuation of the stock is almost entirely a … Read the rest of this article!