Will Bank of America Keep Climbing in 2013?

As December comes to a close, 2013 is just around the corner, and it's a good time to look at the future prospects for the stocks you own. If you don't know where a company's headed in the next year and beyond, then it's impossible to make an informed decision about whether you should add the stock to your portfolio -- or sell it if you already own it.

Today, I'll look at Bank of America (BAC 1.52%). Bank of America became a member of the Dow Jones Industrials (^DJI 0.76%) in 2008 in perhaps one of the most ill-timed additions the average has ever made. But in the past year, Bank of America has soared, and investors seem to believe the bank has put the worst of the financial crisis behind it. Can B of A keep moving higher? Below, you'll learn more about Bank of America's prospects for 2013.

Stats on Bank of America

Source: Yahoo Finance.

What's in store for Bank of America in 2013?
Bank of America was by far the biggest gainer in the Dow in 2012, charging back from last year's fears that the bank wouldn't be able to raise enough capital. Since then, B of A has sold off noncore assets and shored up its financial condition.

The big challenge B of A faces going forward, though, is its Countrywide mortgage unit. MBIA (MBI 1.81%) has sued the company over some of its bad loans. Meanwhile, Fannie Mae is now allowed to force banks to buy back mortgages they sold to Fannie Mae if a mortgage insurer stops covering a loan, so B of A and peers Wells Fargo (WFC -0.04%) and Citigroup (C 2.64%) are among many banks facing huge potential liability. Add to that the fact that B of A customers gave their bank the worst rating in the business, and you can see that the bank has work to do.

Still, going forward, Bank of America intends to start ramping up mortgage lending again. Even with an 18% boost in mortgage writing over the past year, the bank is far behind rivals Wells Fargo and JPMorgan Chase (JPM 1.35%). Still, as the company seeks permission to start paying a more significant dividend to shareholders, the key objective for B of A and CEO Brian Moynihan will be to pass next year's round of Federal Reserve stress tests. If it can do so, it should inspire confidence going forward that Bank of America is back in business for good.

Analysts remain unconvinced, given their price targets that, for the most part, lag behind growth we've already seen in the shares. Nevertheless, if B of A can keep moving its business forward strongly, then its share price could have more room to run.

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