Bank of America Corp. (BAC, Financial)
Despite one of the most challenging economic environments in recent memory, Bank of America has been able to maintain positive earnings throughout the pandemic, highlighting the success of their transformation over the last decade. Management anticipates a continued recovery from the pandemic as the company recently decreased their provision for credit losses substantially. Digital banking continues to be a strong point for the company, making up nearly 50% of all consumer banking sales. Bank of America leverages their scale in the banking industry to benefit from cost savings and switching costs. In mid-March, the Fed increased its 2021 GDP growth forecast to 6.5%. Bank stocks tend to perform well as the economy strengthens. Investors have been eying increasing demand for loans and decreasing default rates which boost profit margins for companies like Bank of America.
From Jeff Auxier (Trades, Portfolio)'s Auxier Asset Management first-quarter 2021 commentary.
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