Bank of America Corporation (NYSE:BAC), SPDR S&P 500 ETF (ETF:SPY) – If You Invested

Investors who have owned stocks in 2021 have generally experienced some big gains. In fact, the SPDR S&P 500 ETF Trust (NYSE: SPY) total return over the last 12 months is 23.3%. But there is no question some big-name stocks performed better than others along the way.

Bank of America’s Big Run: One company that has been a decent investment in the past year has been U.S. megabank Bank of America Corp (NYSE: BAC).

Bank of America was one of several big banks that outperformed in 2021 in an environment of falling interest rates, elevated financial market trading activity and impressive loan growth.

Bank of America consistently beat analyst earnings expectations throughout 2021, and it has one of the most interest-rate sensitive asset portfolios of all large cap bank stocks in 2022. Bank of America’s net interest margins could get a boost from rising interest rates in 2022.

In its third-quarter earnings report, Bank of America said a 1% rise in interest rates would generate an extra $7 billion in net interest income for the company in 2022. The Federal Reserve is currently projecting three interest rate hikes in 2022, and the bond market is anticipating the Federal Reserve’s fed funds target rate range will rise from between 0% and 0.25% today to between 1% and 1.25% by the end of the year.

At the beginning of 2020, Bank of America shares were trading at $35.35. By the beginning of March, the stock was down to around $28 on news of the coronavirus spreading in China. Then later that month, when the market crashed during the U.S. COVID-19 outbreak, Bank of America shares dropped as low as $17.95.

When the market bounced off pandemic lows, Bank of America began to rebound as well. The stock recovered to as high as $29.01 in June 2020 before its recovery rally stalled. Bank of America shares traded all the way back down to $22.39 in July before coming back to life and closing out 2020 at around $30.

Bank of America In 2022, Beyond: Bank of Americahit the $40 mark in April 2021 and reached its 2021 peak of $48.69 in November. The stock rallied to a new decade high of $50.08 in January 2022. Today, Bank of America shares are trading at $46.30.

Bank of America investors who bought one year ago and held on with hopes for a big 2021 performance have generated a nice return on their investment at this point. In fact, $1,000 in Bank of America stock bought on Jan. 18, 2021, would be worth about $1,430 today, assuming reinvested dividends.

Looking Ahead: Analysts are expecting Bank of America to make more multi-year highs in the next 12 months. The average price target among the 24 analysts covering the stock is $51.75, suggesting 11.8% upside from current levels.

Photo: Tony Webster via Wikimedia.