Monday, July 9, 2007
Why doesn't the market show any love to AIG and Bank of America? I think Bank of America is case of people associating BAC with subprime and preworrying about a declining credit for the american consumer which would result in credit card payments, mortgages and home equity lines at best being late and at worst resulting in foreclosures. That said, I see the consumer by and large in good financial shape at this time. Needless to say, BAC at a shade under 49 and a forward PE of 9 is without question a buy especially if you have a long term investment horizon. AIG is more puzzling to me. The scandals at AIG are over, insurance had a record year last year and overall their finanical products are not in bad shape. It sports a PE of just over 12 which traditionally is very low. It sports of PEG of .85. At $70.44 a share, I just don't get why more people are not jumping on board on this one. Of all the 30 stocks on the DOW, this is the only one that I really love right now. And you get a little 1% dividend which is better than a checking account and their buying back shares. obviously less shares on the market should equal higher stock price. If by the end of 08 this one isn't at 80 to 90 I am going to be shocked and a little pissed.