Bank of America (BAC) this week unveiled its top stocks for following year with the 11 S&P 500 sectors. Though the bank might wish the picks of its do much better than they did in 2020.
The $250 billion bank highlighted stocks it thinks will outperform in all the sectors. 3 of BofA’s 11 picks, consumer staples Walmart (WMT), materials firm Vale (VALE) as well as energy NextEra Energy (NEE) are already beating the S&P 500 and the sectors of theirs this year, states an Investor’s Business Daily analysis of data from S&P Global Market Intelligence as well as MarketSmith. Vale carries a strong 95 IBD Composite Rating.
The rest, however, are laggards. BofA seems to be betting 2021 is a year for left-behind stocks to catch up. Airline Alaska Air (ALK) is down 26 % this season. Which means its stock this season trails the S&P 500’s 15.6 % gain by a whopping forty one percentage points. Though it is in addition thirty five percentage points behind the Industrial Select Sector SPDR’s (XLI) nine % gain this year. BofA didn’t choose a single big-cap technology related S&P 500 stock.
“These stocks align with themes in our 2021 year ahead,” according to the report. Those themes are worth stocks over growth, small stocks over large ones, cyclical stocks more than defensive plus ESG.
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Analysts Agree With 3 BofA S&P 500 Picks Wall Street analysts don’t share BofA’s bullishness on nearly all of its favorite stocks. although they do agree on 3 of them.
Energy firm Chevron (CVX), financial Allstate (ALL) along with real estate Realty Income (O) are the only S&P 500 stocks that BofA’s analysts think will get 10 % or even much more in 2021.
Highest hopes are actually for Chevron. Analysts think the big energy stock is going to be well worth 101.90 in twelve months. If that is accurate, that would be nearly 16 % implied upside.
BofA, in its report, heralded Chevron’s measurement applying it in place to win if investors rotate back into value stocks. In addition, they applauded the company’s healthy cash flow. Right after losing an estimated $4.7 billion in 2020, analysts assume Chevron will make $4.4 billion in 2021. What must you know before buying Chevron stock?
Allstate is an additional stock that S&P 500 analysts agree with BofA on. Analysts think the stock, which dropped nearly six % this year, will rally nearly 12 % in the following twelve months. BofA holds the business out for its high ESG score as well as quality that is high. Street analysts also believe Allstate’s benefit per share will jump nineteen % in 2020.
BofA’s Top Stock Picks For 2021
Company Symbol YTD Gain Upside To Street Price Target* Sector Composite Rating
Walt Disney (DIS) 19.9% -0.8% Communication Services forty five
Hilton Worldwide (HLT) -5.5% -1.9% Consumer Discretionary 45
Walmart (WMT) 22.9% 9.7% Consumer Staples 57
Chevron (CVX) -26.8% 15.6% Energy fourteen
Allstate (ALL) -5.2% 11.1% Financials sixty three
HCA Healthcare (HCA) 11.8% -1.7% Health Care 90
Alaska Air Group (ALK) 26.3% 7.2% Industrials 36
Qorvo (QRVO) 37.1% 2.8% Information Technology 95
Vale (VALE) 30.6% 5.1% Materials 95
Realty Income (O) -17.2% 12.5% Real Estate 22
NextEra Energy (NEE) 24.2% 4.9% Utilities 52
Sources: BofA, S&P Global Market Intelligence, * based on 12 month Wall Street target
2020 A rough Year For BofA’s Picks It’s understandable investors might be suspicious of BofA’s picks. The bank mainly whiffed this season. But to the credit of its, it issued its own mea culpa and published its misses.
In fact, all eleven of BofA’s best stock picks of 2020 lagged their sectors. And many by quite a bit. In a year where technology shot the lights out, BofA’s pick in the industry was dog Intel (INTC), which dropped 16 % in 2020. Which would mean that it lagged the Technology Select Sector SPDR (XLK) by a brutal fifty six percentage points, when the sector ETF shot up forty %. A lot preferable to stick with leading stocks, if you wish to make money.
BofA even chose Exxon Mobil (XOM) as its top energy pick in 2020. It is tough to think of many businesses that have suffered far more in 2020. It lagged the abysmal thirty three % drop in the Energy Select Sector SPDR (XLE) by four percentage points. And it suffered the indignity of getting tossed out of the Dow Jones Industrial Average, also.
Meanwhile, the sole Bank of America Stock | Fintech Zoom
pick for 2020 to defeat the S&P 500 is actually Disney (DIS). In a year of pandemic theme park closures, the stock acquired almost twenty %. And that might explain why Disney is actually the sole 2020 BofA pick to land on its top list for 2021, too.