We recently compiled a list of the 10 Most Profitable Cheap Stocks to Buy Now. In this article, we are going to take a look at where Bank of America Corporation (NYSE:BAC) stands against the other most profitable cheap stocks to buy.
US stocks rose on Friday, May 2, as the S&P 500, Dow Jones Industrial Average, and the tech-heavy Nasdaq all posted impressive gains. The S&P 500 added nearly 1.5% and this marked the ninth straight day of gains to mark the longest winning streak for the S&P 500 since November 2004. The Dow rose 1.4% to also report a ninth winning day in a row. Meanwhile, the Nasdaq gained roughly 1.5%.
The rally comes after China signaled openness to trade talks and a better-than-expected monthly US jobs report. In April, the US economy added 177,000 nonfarm payrolls, which was more than the 138,000 economists had expected. The unemployment rate remained steady at 4.2%. This data indicated resiliency in the labor market despite stock market uncertainty in April due to tariff concerns.
Investors were also encouraged by indications that the US-China trade war could be easing. On Friday, China said it is evaluating recent US proposals for trade talks to see how serious Trump’s administration is about a change in policy stance. China’s commerce minister stated that the “door is open” if the US would agree to pull back on reciprocal tariffs. These comments helped reduce concerns about the risk of an economic slowdown by the tariffs.
Overall, hopes for improved US-China relations combined with solid job growth helped boost confidence on Wall Street.
To compile our list of the 10 most profitable cheap stocks to buy now, we used the Finviz stock screener to find stocks with a forward P/E ratio of less than 15. We sorted our results based on market capitalization and picked the top 25 cheap stocks trading at under 15 times their forward earnings as of April 29, 2025. Next, we focused on profitability and narrowed our choices to stocks that had trailing twelve-month (TTM) net income of more than $1 billion. Finally, we focused on the top 10 profitable stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q4 2024 database of more than 1,000 elite hedge funds. The 10 most profitable cheap stocks to buy now were then ranked in ascending order based on the number of hedge funds holding stakes in them as of Q4 2024.
Why do we care about what hedge funds do? 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).
Is Bank of America Corporation (BAC) The Most Profitable Cheap Stock to Buy Now?
A professional banker providing consultation to a customer in the security of his office.
Forward P/E: 10.88
TTM Net Income: $26.35 Billion
Number of Hedge Fund Holders: 113
Bank of America Corporation (NYSE:BAC) is an American multinational banking and financial services corporation that serves individuals, small and middle-market businesses, and large enterprises with a comprehensive range of banking, investing, asset management, and other financial and risk management products and services. The company also specializes in wealth management, corporate and investment banking, and trading across a wide range of asset classes. Bank of America Corporation (NYSE:BAC) ranks among the most profitable stocks to buy.
The corporation had an impressive Q1 2025 and reported a net income of $7.4 billion, or 0.90 per diluted share, up from $6.7 billion, or $0.76 per share, in Q1 2024. Bank of America Corporation (NYSE:BAC) added about 250,000 net new consumer checking accounts in its consumer banking division to mark the 25th consecutive quarter of growth. Additionally, average deposits grew for the seventh consecutive quarter to nearly $2 trillion. Bank of America Corporation (NYSE:BAC) reported that net interest income (NII) for the quarter was $14.4 billion, and on a fully taxable equivalent basis, NII was $14.6 billion, up 3% year-over-year. The corporation also allocated more capital to its Global Markets business and expanded both consumer and commercial loans. Notably, Bank of America Corporation (NYSE:BAC) bought an $8 billion high-quality residential loan portfolio. This is expected to add just over $100 million in net interest income annually.
During Q1 2025, Bank of America Corporation (NYSE:BAC) returned $6.5 billion to shareholders through $2 billion in common dividends and $4.5 billion in share repurchases. UBS raised its price target on Bank of America Corporation (NYSE:BAC) and maintained a “Buy” rating after the company “leaps over lowered bar” with its Q1 results.
Overall, BAC ranks 2nd on our list of the most profitable cheap stocks to buy now. While we acknowledge the potential of BAC as an investment, our conviction lies in the belief that some 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 the cheapest AI stock.
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