Bank of America (BAC) this week unveiled its top stocks for next year with the 11 S&P 500 sectors. But the bank might wish its picks 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) and energy NextEra Energy (NEE) are already beating both the S&P 500 and the sectors of theirs this year, states an Investor’s Business Daily analysis of information from S&P Global Market Intelligence as well as MarketSmith. Vale carries a strong 95 IBD Composite Rating.
The rest, 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 26 % this year. That means its stock this season trails the S&P 500’s 15.6 % gain by a whopping forty one percentage points. although it’s in addition 35 percentage points behind the Industrial Select Sector SPDR’s (XLI) 9 % 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 value stocks over growth, small stocks more than huge ones, cyclical stocks over 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 most of the favorite stocks of its. But they do agree on 3 of them.
Energy firm Chevron (CVX), financial Allstate (ALL) and real estate Realty Income (O) are the only S&P 500 stocks that BofA’s analysts believe will acquire ten % or even much more in 2021.
Highest hopes are for Chevron. Analysts feel the energy stock will be well worth 101.90 in twelve months. If perhaps that is correct, that would be almost sixteen % implied upside.
BofA, in its report, heralded Chevron’s measurement applying it in place to win if investors rotate back into value stocks. They also applauded the company’s healthy money flow. Right after losing an estimated $4.7 billion in 2020, analysts think Chevron will make $4.4 billion in 2021. What should you know before you purchase Chevron stock?
Allstate is another stock that S&P 500 analysts agree with BofA on. Analysts believe the stock, which dropped almost 6 % this year, will rally almost 12 % in the next twelve months. BofA holds the organization out for its high ESG score and top quality. Street analysts also feel Allstate’s benefit 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 forty five
Hilton Worldwide (HLT) 5.5% -1.9% Consumer Discretionary forty five
Walmart (WMT) 22.9% 9.7% Consumer Staples 57
Chevron (CVX) -26.8% 15.6% Energy 14
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 is easy to understand investors could be skeptical of BofA’s picks. The bank largely whiffed this season. But to its credit, it issued the own mea culpa of its and released its misses.
In reality, all 11 of BofA’s top stock picks of 2020 lagged the sectors of theirs. And plenty of by a great deal. In a year where technology shot the lights out, BofA’s pick in the industry was dog Intel (INTC), which dropped sixteen % in 2020. That would mean that it lagged the Technology Select Sector SPDR (XLK) by a hard fifty six percentage points, as soon as the sector ETF shot up 40 %. Much better to stick with leading stocks, if you want to earn money.
BofA also chose Exxon Mobil (XOM) as the main power pick of its in 2020. It’s hard to think of many businesses that have suffered more in 2020. It lagged the abysmal 33 % 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, too.
Meanwhile, the only Bank of America Stock | Fintech Zoom
pick for 2020 to beat the S&P 500 is Disney (DIS). In a year of pandemic theme park closures, the stock gained almost twenty %. Which may explain the reason why Disney is the sole 2020 BofA pick to land on its main list for 2021, too.