Bank of America (BAC) this week unveiled its top stocks for next year with the 11 S&P 500 sectors. But the bank may well wish the picks of its do better than they did in 2020.
The $250 billion bank highlighted stocks it thinks will outperform in all the sectors. Three of BofA’s eleven picks, consumer staples Walmart (WMT), materials solid Vale (VALE) and energy NextEra Energy (NEE) are already beating the S&P 500 and their sectors this year, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. Vale carries a strong 95 IBD Composite Rating.
The majority, though, are laggards. BofA appears to be betting 2021 is a year for left behind stocks to get up. Airline Alaska Air (ALK) is down twenty six % this year. Which means its stock this season trails the S&P 500’s 15.6 % gain by a whopping forty one percentage points. Though it’s also 35 percentage points behind the Industrial Select Sector SPDR’s (XLI) nine % gain this year. BofA did not choose a 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 huge ones, cyclical stocks more than protective additionally ESG.
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Analysts Agree With Three BofA S&P 500 Picks Wall Street analysts don’t share BofA’s bullishness on nearly all of its favorite stocks. But they do agree on three of them.
Energy firm Chevron (CVX), financial Allstate (ALL) and real estate Realty Income (O) are actually the only S&P 500 stocks that BofA’s analysts suppose will acquire 10 % or perhaps much more in 2021.
Highest hopes are for Chevron. Analysts believe the big power stock is going to be worth 101.90 in twelve months. If perhaps that is accurate, that would be nearly sixteen % implied upside.
BofA, in the report of its, heralded Chevron’s size applying it in position to win whether investors rotate back into value stocks. They also applauded the company’s stable cash flow. 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 yet another stock that S&P 500 analysts agree with BofA on. Analysts believe the stock, which dropped almost 6 % this year, will rally nearly twelve % in the following twelve months. BofA holds the company out for its high ESG score as well as quality which 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 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 fourteen
Allstate (ALL) -5.2% 11.1% Financials 63
HCA Healthcare (HCA) 11.8% -1.7% Health Care ninety
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 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 A general Year For BofA’s Picks It’s understandable investors could be suspicious of BofA’s picks. The bank basically whiffed this year. But to the credit of its, it issued a mea culpa and published its misses.
The truth is, all 11 of BofA’s top stock picks of 2020 lagged their sectors. And many 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. Which implies it lagged the Technology Select Sector SPDR (XLK) by a brutal fifty six percentage points, when the sector ETF shot up forty %. Much preferable to stick with top stocks, in case you wish to make money.
BofA even chose Exxon Mobil (XOM) as its top power pick in 2020. It is hard to think of many organizations that have suffered far 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 conquer the S&P 500 is Disney (DIS). In a year of pandemic theme park closures, the stock gained nearly twenty %. And this could explain the reason why Disney is the only 2020 BofA pick to land on the main list of its for 2021, too.