So, you've got some extra money set aside from the most recent stimulus check, or from your tax returns, and you want to invest a chunk of it in a stock that will generate solid gains. You could opt for a few shares of a big-name tech company, or roll the dice on a speculative meme stock. Or you could invest that money in a market-leading company that's among the top performers in the S&P 500 this year.

Here are two good reasons why Bank of America (BAC 0.45%) would be a good place to invest $1,000.

 A woman with a stack of bills fanned out in her hands.

Image source: Getty Images.

1. It's a market leader

Bank of America is one of the biggest names in banking -- the second-biggest, in fact, with $3 trillion in assets under management as of March 31, behind only JPMorgan Chase. It generated $22.8 billion in revenue in the first quarter, up 13% from the same period in 2020 but, more important, back to its levels from the first quarter of 2019, before the pandemic. The bank generated $8.1 billion in net income, or $0.867 per share, in Q1. This is double what it was a year ago, primarily because the bank was able to release some of its provision for credit losses, reflecting an improvement in credit quality and the overall economy.

What sets Bank of America apart from most of its competitors is its diversity of revenue, as it not only generates revenue from its consumer banking business, but also from its wealth and investment management, investment banking, and institutional trading and analytics arms. This allows the bank to perform better than most of its peers through various market cycles. Last year, the stock was down 11% while most of its banking peers fared far worse. Over the past 10 years, it has posted an annualized return of 14.7% through April 23, which beats both the S&P 500 and the overall financial sector.

This year, the stock is up roughly 30%. One of the driving forces for Bank of America is its leadership in digital banking. Bank of America was out in front of its competitors in digital banking and is the clear leader in this space, with some 40 million active users on its platform. There was a 3% year-over-year increase in digital banking users in the first quarter, and now about 70% of Bank of America's customers are digitally active.

2. It's got a recovering economy behind it

As we emerge from the recession, economic conditions are improving, and that's great news for Bank of America. The U.S. GDP is expected to grow 6% in 2021, which would be the highest annual growth rate since 1983. In 2022, it is projected to grow another 3.5% on top of that. Eventually, as the economy gets stronger, the Fed will raise interest rates and that will further help the bank. 

These are great trends for a market-leading bank like Bank of America. Banks are cyclical in that they tend to move in tandem with the GDP, as more people and businesses typically borrow and invest when the economy is good. On top of that, the Biden administration is looking to pass a $2 trillion infrastructure bill, which would be a further boon to a large lender like Bank of America, In addition, Bank of America has positioned itself well as a leader in digital banking, a trend that will only continue to grow over the next decade.

Analysts certainly think that Bank of America has more room to run. The median consensus estimate among analysts calls for the stock price to rise another 10% this year, with some predicting a move to as high as $50 per share over the next 12 months.

Despite the stock's gains this year, it's still a great value. It has a price-to-earnings (P/E) ratio of about 17 and a forward P/E of 13, which are average, if not a little low, for the sector. The price-to-book ratio is also fairly low, at around 1.4. For a market-leading company with strong, consistent earnings power, this is a good valuation.

If you invested $1,000 in Bank of America's stock right now, you could buy around 25 shares. That amount probably won't make you a millionaire any time soon, but the bank should generate solid long-term growth, as it has for the past decade. There are a lot of places to invest that $1,000, but there aren't many that will give you more bang for your buck than Bank of America.