Is Bank of America (BAC) a Buy?

Shares of Bank of America (NYSE:BAC) are near a 52 week low, to the tune of within 2.25% of touching it.  Over the past 12 months Bank of America Corp (BAC) shares have traded between $13.02 and its 52-week high of $19.86.

The million dollar question is, is BAC a buy?

News came out today that the four largest U.S. banks could face as much as $42 billion in losses as they repurchase faulty mortgages from housing finance giants Fannie Mae and Freddie Mac, Fitch Ratings said on Wednesday.

Total repurchases are based on the success of Fannie Mae and Freddie Mac proving their cases, but Fitch said it is concerned that more aggressive requests by the companies could expose banks to greater than expected losses.

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Under an "extremely adverse scenario," the pool of "at risk" loans for JPMorgan Chase & Co, Citigroup Inc, Bank of America Corp and Wells Fargo & Co could total $175 billion to $180 billion, Fitch said.

Bottom line:

While this news sounds bad, here at the Masters we don't think that this extremely adverse scenario is going to happen. Shares of BAC are looking very tempting right now as a base is building and shares are starting to bounce. BAC is a "Buy"

Disclaimer: No positions in any of the securities mentioned in this publication.

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