Bank of America (BAC) this week unveiled its top stocks for next year with the 11 S&P 500 sectors. although the bank may well 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 of the sectors. Three of BofA’s eleven picks, consumer staples Walmart (WMT), materials solid Vale (VALE) as well as energy NextEra Energy (NEE) are already beating both the S&P 500 and their sectors this season, says an Investor’s Business Daily analysis of facts from S&P Global Market Intelligence and MarketSmith. Vale carries a strong ninety five IBD Composite Rating.
The majority, however, are laggards. BofA appears to be betting 2021 is a year for left-behind stocks to get up. Airline Alaska Air (ALK) is down 26 % this season. That means its stock this year trails the S&P 500’s 15.6 % gain by a whopping 41 percentage points. however, it is also thirty five percentage points behind the Industrial Select Sector SPDR’s (XLI) nine % gain this season. BofA did not choose a big-cap technology related S&P 500 stock.
“These stocks align with themes in our 2021 year ahead,” based on the report. Those themes are worth stocks over growth, little stocks more than big ones, cyclical stocks over 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 most of its favored stocks. But they do agree on 3 of them.
Energy firm Chevron (CVX), financial Allstate (ALL) along with real estate Realty Income (O) are actually the sole S&P 500 stocks that BofA’s analysts think will get ten % or even more in 2021.
Highest hopes are for Chevron. Analysts believe the big power stock will be well worth 101.90 in twelve months. If perhaps that is accurate, which would be nearly sixteen % implied upside.
BofA, in the report of its, heralded Chevron’s size applying it in spot to win whether investors rotate back into value stocks. They also applauded the company’s sound money flow. After losing an estimated $4.7 billion in 2020, analysts believe Chevron will make $4.4 billion in 2021. What must you know before buying Chevron stock?
Allstate is another stock that S&P 500 analysts agree with BofA on. Analysts believe the stock, which dropped almost six % this year, will rally nearly twelve % in the following twelve months. BofA holds the organization out for the high ESG score of its and good quality. Street analysts also feel Allstate’s profit per share will jump 19 % 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 45
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 14
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 thirty six
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 twenty two
NextEra Energy (NEE) 24.2% 4.9% Utilities 52
Sources: BofA, S&P Global Market Intelligence, * based on 12 month Wall Street target
2020 An approximate Year For BofA’s Picks It’s understandable investors may be suspicious of BofA’s picks. The bank mostly whiffed this season. But to its credit, it issued a mea culpa and released its misses.
The truth is, all eleven of BofA’s best stock picks of 2020 lagged the sectors of theirs. And several by quite a bit. In a season where technology shot the lights out, BofA’s pick in the industry was dog Intel (INTC), which dropped 16 % in 2020. That would mean that it lagged the Technology Select Sector SPDR (XLK) by a brutal 56 percentage points, when the sector ETF shot up 40 %. A lot better to stay with the best stocks, in case you would like to make a profit.
BofA even chose Exxon Mobil (XOM) as its main energy pick in 2020. It is hard to think of many companies that have suffered a lot more in 2020. It lagged the abysmal 33 % drop in the Energy Select Sector SPDR (XLE) by 4 percentage points. And it suffered the indignity of getting tossed out of the Dow Jones Industrial Average, too.
Meanwhile, the only Bank of America Stock | Fintech Zoom
pick for 2020 to beat the S&P 500 is actually Disney (DIS). In a season of pandemic theme park closures, the stock acquired almost 20 %. And this might explain the reason why Disney is actually the only 2020 BofA pick to land on the top list of its for 2021, too.