Bank of America (BAC) this week unveiled its top stocks for next year among the 11 S&P 500 sectors. But the bank might hope its picks do better than they did in 2020.
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The $250 billion bank highlighted stocks it thinks will outperform in all the sectors. Three of BofA’s 11 picks, consumer staples Walmart (WMT), materials firm Vale (VALE) and utility NextEra Energy (NEE) are already beating both 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 rest, though, 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 year. That means its stock this year trails the S&P 500’s 15.6% gain by a whopping 41 percentage points. But it’s also 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 over large ones, cyclical stocks over defensive plus ESG.
Analysts Agree With Three BofA S&P 500 Picks
Wall Street analysts don’t share BofA’s bullishness on most 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 the only S&P 500 stocks that BofA’s analysts think will gain 10% or more in 2021.
Highest hopes are for Chevron. Analysts think the energy stock will be worth 101.90 in 12 months. If that’s correct, that would be nearly 16% implied upside.
BofA, in its report, heralded Chevron’s size putting it in position to win if 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 think Chevron will make $4.4 billion in 2021. What should you know before you buy Chevron stock?
Allstate is another stock that S&P 500 analysts agree with BofA on. Analysts think the stock, which dropped nearly 6% this year, will rally nearly 12% in the next 12 months. BofA holds the company out for its high ESG score and high quality. Street analysts also think 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 | 63 |
| 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 | ( |
Read More: S&P 500 Beaters? Bank Of America Names Top 11 Stock Picks For 2021
