Jim Cramer Says Bank of America Corporation (BAC) ‘Caught a Big Break’ Because It Was Up 5%
We recently compiled a list of the Jim Cramer is Talking About These 14 Stocks Before Earnings. In this article, we are going to take a look at where Bank of America Corporation (NYSE:BAC) stands against the other stocks Jim Cramer is talking about before earnings.
As earnings season kicks off, Jim Cramer of Mad Money offered insights on what investors should watch in the coming week on Wall Street. He highlighted the anticipated reports from several major banks, along with a few other companies, as key events to monitor.
Cramer expressed optimism about the current market conditions, noting that the situation aligns with his previous predictions that the market would thrive once the Federal Reserve began reducing interest rates while the economy remained strong. He remarked on the spectacular earnings reported by some major banks on Friday, emphasizing that this positive news is particularly impactful now, as opposed to previous instances when the Fed was tightening, causing good news to go largely unnoticed. Cramer believes that with the Fed now supportive of the market, there is potential for more favorable times ahead.
Looking to Monday, Cramer predicted that the focus will shift away from earnings reports due to other significant developments over the weekend. He mentioned the anticipated unveiling of a Chinese stimulus package and noted that although the rally in China has stalled, it could regain momentum if the Chinese government injects substantial funds into real estate and the stock market.
“Now, on Monday, we won't be focused on earnings. There's a lot of other stuff happening over the weekend. For instance, I think we'll be parsing the Chinese stimulus package that's going to be unveiled. The China rally is stalled, but it can get rolling again if the Chinese Communist Party keeps throwing tens of billions of dollars for the stimulus at real estate, at the stock market.”
Cramer warned that the financial sector will face a significant test on Tuesday, as different banks will be reporting their earnings. Cramer reminded investors that we are just at the beginning of one of the year's four reporting periods, which can be chaotic and open to various interpretations.
“We’re at the beginning of one of the year’s four reporting periods,” he said. “They’re jumbled. They’re open to a lot of interpretation. They’re fast. So listen to the calls, ponder a moment, and only then should you pull the trigger.”
Our Methodology
For this article, we compiled a list of 14 stocks that are slated to release earnings this week and were discussed by Cramer during his episode of Mad Money on October 11. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 92
Cramer talked about Warren Buffett’s move to sell Bank of America Corporation (NYSE:BAC) shares and how it can be helpful. Here’s what he said:
“Bank of America caught a big break today. Warren Buffett has sold so much Bank of America stock now that he's under 10%, where he no longer has to report every time he sells stock. Well, that'll help the stock immensely. Why? Because it wears you down to see that Warren Buffett sold some shares every few days. You never want to be on the other side of a Buffett trade, right? That said, Bank of America might have borrowed some of the upside today for next week because it was up 5%.”
Bank of America (NYSE:BAC) is a well-known financial institution that provides various banking and financial services to individual consumers, businesses, institutional investors, and government institutions across the globe. It offers essential products such as savings and checking accounts, various loan options, investment management services, and wealth management solutions.
In the second-quarter earnings report, Bank of America (NYSE:BAC) presented mixed results. Revenue remained relatively stable, with a slight increase of 1% to reach $25.4 billion. However, net interest income declined by 3% to $13.7 billion, and EPS dropped from $0.88 to $0.83. Despite these challenges, the company experienced growth in its lending activities, with loans rising modestly from the previous year to $1.05 billion. Average deposits also saw an increase of 2%, totaling $1.91 billion, indicating a strengthening balance sheet.
During the second-quarter earnings call, management highlighted that approximately $10 billion in securities mature each quarter, presenting an opportunity for reinvestment at rates 300 basis points higher.
Overall BAC ranks 4th on our list of the stocks Jim Cramer is talking about before earnings. While we acknowledge the potential of BAC as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BAC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.