The collective wisdom of 1,256 CAPS players indicates that Bank of America (NYSE:BAC) will outperform the market. In fact, only 56 CAPS players are bearish on Bank of America. The company just released terrific results for fiscal 2006. Is there a sound basis for the CAPS community to maintain its overwhelmingly bullish sentiment?

Bank of America is a financial services giant with a $239 billion market cap. Following its acquisition of MBNA last year, the company became the largest issuer of credit cards in the United States. B of A's network of retail bank branches exceeds any competitor's, and it also sports substantial investment-banking and asset-management operations.

Despite its history of growth by acquisition, the bank has not become unwieldy and wasteful. Instead, B of A has preserved a culture that focuses on cost controls, leveraging its scale to reduce operating expenses relative to net revenues. The proof lies in B of A's consistently low efficiency ratio.

The banking industry faces a challenging interest rate environment as 2007 begins. The flat yield curve continues to keep interest rate spreads tight, which consequently reduces the net interest income that banks can earn. Net interest income provided approximately 47% of B of A's $73 billion in total 2006 revenue. The company's low cost of funds and broadly diversified loan portfolio, however, make the bank better equipped than many of its competitors to effectively manage its net interest margin in this difficult environment.

B of A's sophisticated marketing approach should help it replace declining net interest income with increased sales of other fee-based products. Innovative financial products, including the Keep the Change checking account and free online equity trading for customers with at least $25,000 in deposits, have steadily attracted customers and assets. A successful sales culture has helped to retain and expand those relationships, and B of A's broad range of product offerings indicates that it has additional capacity to cross-sell. The bank's pending acquisition of Charles Schwab's (NASDAQ:SCHW) U.S. Trust private bank promises to fill an important strategic gap in B of A's product line.

Unlike rival Citigroup (NYSE:C), whose earnings have been hurt by uneven performance from a sprawling array of products and developing international markets, B of A has been focused primarily on building a dominant position in the fragmented U.S. market of consumer and middle-market business customers. Foreign markets, especially in Asia, do offer attractive long-term growth. But in the short run, B of A's domestic focus and solid execution continue to deliver impressive earnings growth.

At a recent share price of $52.40, B of A stock is trading at a price-to-earnings multiple near the low end of its five-year range. While no specific events that might lift B of A's stock this year spring to mind, the stock has an attractive risk profile. I believe that the company's significant competitive advantages and successful operating record make B of A's stock the best financial services company to own in 2007.

What do you think of Bank of America's prospects? Go to Motley Fool CAPS right now and make your voice heard. If you agree with me, rate it "outperform." If you don't, rate it "underperform." Based on your responses, we'll crown the "Best Financial Stock for 2007" next week.

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Fool contributor Michael Leibert welcomes your feedback. He owns shares of Charles Schwab, a Stock Advisor pick. Bank of America is an Income Investor selection. The Fool has a disclosure policy.