Cramer Banks On Bank of America (BAC)

Today, TheStreet.com's (Nasdaq: TSCM) Jim Cramer purchased 2,500 shares of Bank of America (NYSE: BAC) at the open around $12 for his ActionAlertsPlus.com portfolio.

Below Cramer outlines several of the reasons why he decided to take the plunge into Bank of America.

• BAC raised most of its capital that is required by the U.S. government under the stress test through "at the market" sales, preferred share exchanges and its $7.3 billion sale of China Construction Bank. This ensures Bank of America will eventually be able to repay TARP, like its competitors.
  
• As everyone knows, Cramer thinks housing has bottomed, therefore Jim thinks Bank of America is a great way to play the housing recovery with its ownership in Countrywide and other mortgage operations.
  
• The steep yield curve is a big plus as banks benefit from borrowing short and lending long, called positive spread investing, and will also contribute nicely to earnings.
  
• He noted the Merrill Lynch integration is going very well, and it has had market share gains in capital markets, investment banking and trading.

Finally, Jim Cramer believes Bank of America's true earnings power is $3 a share, and that makes the stock very cheap on an absolute basis and relative to its historical average. He noted he'd buy more BAC on any weakness, especially at $11 or lower.

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Bank of America is up 1.69% in today's trading.