Bank of America's Shares Surged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Bank of America (NYS: BAC) shares were one of the weaker performers yesterday, dropping 2% on concerns aired by (former tech analyst) Henry Blodget that the bank was in dire need of capital, and might have to raise as much as $200 billion to stay in business. This morning, the rebound came -- shares up 10% on reports that certain other analysts -- ones not banned for life from the securities industry -- think B of A will do just fine.

So what: Adding to the refutation of Henry Blodget, the analysts in question, Meredith Whitney and Raymond James staffer Anthony Polini actually work in the banking industry. That's as contrasted to Mr. Blodget, who previously practiced porcine cosmetology, and the pumping and dumping tech stocks.

Now what: Which analyst should you listen to? Hard to say. I personally don't put total faith in any of them. But with B of A stock currently selling for a bare 0.3 times book value, and less than 5 times next year's earnings estimates, my hunch is that the facts favor B of A and its backers in this battle. The stock looks cheap to me.

Bears versus bulls -- who will carry the day?Add Bank of America to your Watchlistand find out.

At the time this article was published Fool contributorRich Smithdoes not own Bank of America, but the Motley Fool does. The Motley Fool has adisclosure policy. Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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