Is Bank of America (BAC) The Dirt Cheap Stock To Invest In Now?

We recently published a list of 10 Dirt Cheap Stocks To Invest In Now. In this article, we are going to take a look at where Bank of America Corporation (NYSE:BAC) stands against other dirt cheap stocks to invest in now.

Investor’s Guide to Navigating the Volatilitc

The stock market has been experiencing volatility and has quickly shifted from the post-election highs to being priced for recession. As of April 8, the S&P 500 had declined 19% from the all-time highs. The magnitude of this fall is slightly shy of the bear market threshold, thereby creating a sense of confusion for the investors to pave their way forward. To talk about the investment strategy during times of volatility, Prime Capital Financial CIO Will McGough joined Yahoo Finance on April 11 for an interview.

McGough noted that they have been telling their clients and advisors to prepare for the volatility before the start of 2025. This is partly due to the new regime in Washington DC and its policies. However, more importantly, the market has had two really great years with more than 20% gains back to back, as a result, the price-to-earnings ratios were extended to historical extremes and earnings growth was delivering around 15% to 20%. These figures suggested that the market was almost at its peak with very little upside potential left to explore, which pointed towards risks of volatility.

McGough presented his investment strategy during this time of volatility. He highlighted that they have been advising investors to look for diversity and increased exposure, which essentially means to be cognizant of the exposure your portfolio has in terms of growth and value stocks. He noted that if you have the “Mag Seven” in your portfolio, they are concentrated and are categorized as large-cap growth, which suggests that the portfolio should be balanced with value and dividend-paying stocks as well. McGough noted that this helps temper the volatility and provides some stability. He also highlighted that after 15 years the market is finally moving away from the Mag Seven and in this scenario, the investors simply need to look for Market Weight stocks rather than Overweight.

Another area for investors to look at is the international market. McGough pointed out that for a greater chunk of recent history, the United States market has dominated international stocks, however, the current market tightening and Trump administration policies are encouraging international stocks to increase spending and promote revenue growth. Therefore this can be a good time for investors to look ahead of the United States market into international stocks such as those based in Europe and Germany. McGough concluded that all of the market situation points towards a single mantra of being diversified rather than placing all the eggs in a single basket.

Our Methodology

To compile the list of 10 dirt cheap stocks to invest in now, we used the Finviz stock screener, Seeking Alpha, and Yahoo Finance. Using the screener we first aggregated a list of stocks trading below the Forward P/E of less than 10 with earnings expected to grow during the year. After sorting the list by market capitalization, we cross-checked each stock’s P/E and earnings growth from Seeking Alpha and Yahoo Finance, respectively. Lastly, we ranked the stocks in ascending order of the number of hedge fund holders, sourced from Insider Monkey’s database.

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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Bank of America Corporation (NYSE:BAC) 

Forward P/E Ratio: 9.91

Earnings Growth This Year: 13.03%

Number of Hedge Fund Holders: 113

Bank of America Corporation (NYSE:BAC) is an American multinational financial company that operates through various key business segments including Consumer Banking, Global Wealth, and Investment Management. Global Banking, and Global Markets. Its operations span over 35 countries and is categorized as one of the “Big Four” banking institutions in the US.

On April 8, Truist Financial analyst John McDonald CFA maintained a Buy rating on the stock with a price target of $50. Hardman Johnston Global Equity Strategy provided a bullish sentiment on Bank of America Corporation (NYSE:BAC) in its Q4 2024 investors letter. The fund noted that the bank is recognized as the second-largest bank in the developed world and operates the third-largest branch network in the United States. The bank makes 86% of its revenue from the United States and is expected to benefit from the Trump administration. Moreover, it also has a diversified portfolio across various banking segments including retail banking, commercial banking, wealth management, and investment banking.

During fiscal 2024, Bank of America Corporation (NYSE:BAC) generated $11 billion in revenue through its Consumer Banking segment. This contributed more than 40% to the total earnings. Moreover, it also has a strong digital presence with more than 14 billion logins and digital sales of more than 60% in Q4 alone. It is the top dirt-cheap stock to invest in now.

Hardman Johnston Global Equity Strategy stated the following regarding Bank of America Corporation (NYSE:BAC) in its Q4 2024 investor letter:

“Bank of America Corporation (NYSE:BAC) is the second largest bank in the developed world and operates the third largest branch network in the US. With 86% of revenues coming from the US, the bank is a clear beneficiary of the lower regulatory environment expected from the incoming administration. The company’s business is highly diversified across retail, commercial, wealth management, and investment banking, with significant scale across all verticals. Management believes there is a big opportunity going forward in growing and monetizing its mass retail client base. Wealth is another huge opportunity, with the Merrill Lynch platform enabling customers to make more transactions and purchase additional products. Lastly, Bank of America has an opportunity to increase efficiency through cost reduction and online banking. Our expectation is for the bank’s ROE to move significantly higher, driving EPS growth and higher multiples.”

Overall, BAC ranks 1st on our list of dirt cheap stocks to invest in now. While we acknowledge the potential of BAC to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. 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 this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.