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Bank Of America Names Top 11 Stock Picks For 2022Krantz, Matt.Investor's Business Daily; Los Angeles [Los Angeles]. 20 Dec 2021. Bank of America (BAC) just unveiled its top stocks for next year among the 11 S&P 500 sectors. But keep in mind the bank's track record wasn't so hot in 2021. The $380 billion bank highlighted stocks it thinks will outperform in all the S&P 500 sectors. Five of BofA's 11 picks for 2022, including energy Exxon Mobil, financial firm Wells Fargo and health care CVS Health, 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. Exxon Mobil carries a decent 81 IBD Composite Rating. The rest, though, are laggards. But, BofA seems to be betting 2021 is a year for overlooked high-quality value-priced companies with defensible yields. The bank didn't name a single giant S&P 500 stock as a top pick for 2022. Instead, six of BofA's 11 picks yield more than 2%, while the S&P 500 yields just 1.2%. Real estate play Welltower yields 2.9% annually, much higher than the S&P 500. But it's not just a high-yield play. The stock is up 28.8% this year. That means its stock this year tops the S&P 500's 23% gain by nearly 6 percentage points. At the same time, though, Welltower's run this year is 8 percentage points behind the Real Estate Sector SPDR's (XLRE) this year, showing it's not the high-flyer of the sector. "These stocks have 23% implied upside, on average, to our analysts' price objectives (as of December 16, 2021), plus an average dividend yield of 2.2% (vs. 1.7% for the 11 sectors on average)," said the report. Analysts Agree With Three BofA S&P 500 Picks Wall Street analysts agree unanimously with BofA's bullishness on all of its favorite stocks. Analysts think all 11 of BofA's top picks for 2022 will be worth more in 12 months than they are now. And not by a small amount. On average, analysts think these 11 S&P 500 stocks will rise 13.7% over the next year. And if they're right, that would top the roughly 10% gains some are forecasting for the S&P 500 in 2022. And Wall Street is downright bullish on two of BofA's picks for 2022. Analysts see shares of communications firm Walt Disney and consumer discretionary BorgWarner jumping more than 20% in 2022. Highest hopes are for Disney, which turned out to be a disappointment in 2021. Analysts think the stock will be worth 195.52 in 2022, up more than 31% from its price now. BofA, though, was bullish on Disney for 2021, too. BofA still heralds the company's exposure to travel reopening, plus high quality balance sheet. But Disney didn't bring the magic in 2021. Shares of the entertainment giant plunged 17.9% in 2021 as signups for its online streaming service disappointed. Meanwhile, lingering Covid-19 worries delayed the comeback in some of its travel destinations. BorgWarner is another S&P 500 stock analysts agree with BofA on for 2022. Analysts think shares of the auto parts maker will hit 53.78 in 2022. That's an implied gain of more than 23%. BofA likes BorgWarner for its position to win from higher inflation plus lack of ownership by many large mutual funds. The company's profit is seen hitting $4.71 a share in 2022, up more than 23% from 2021. BofA's Top Stock Picks For 2021 Analysts agree and think all will rise, too Company Symbol YTD % ch. Implied upside to street price target* Sector Yield Composite Rating Walt Disney -17.9% 31.4% Communication Services 0% 45 BorgWarner 12.9% 23.3% Consumer Discretionary 1.5 61 Mondelez International 11.1% 8.3% Consumer Staples 2.1 83 Exxon Mobil 45.6% 17.4% Energy 5.7 81 Wells Fargo 58.9% 11.6% Financials 0.8 78 CVS Health 46.9% 11.9% Health Care 2.1 80 Eaton 37.4% 10.1% Industrials 1.8 82 F5 32.4% 3.8% Information Technology 0 85 Eastman Chemical 18.3% 12.4% Materials 2.5 91 Welltower 28.8% 11.3% Real Estate 2.9 61 NRG Energy 7.8% 9.2% Utilities 3.3 91 SPDR S&P 500 ETF Trust 22.9% 1.2 Sources: BofA, S&P Global Market Intelligence, * based on 12-month Wall Street target as of Dec. 17 2021 Another Rough Year For BofA's Picks Don't apologize if you look askance at BofA's picks, though. They've underperformed the S&P 500 again in 2021, after mostly trailing in 2020, too. Seven of BofA's 11 top picks for 2021 lagged both the S&P 500 and their sector. And a few were epic fails. Disney was the No. 1 misfire by BofA. By slipping 18% during the year, shares of the entertainment giant lagged the S&P 500 by a whopping 41 percentage points. And Disney was a laggard even in its sector. Shares fell short of the communications services sector's ho-hum 13% gain by nearly 32 percentage points. Seeing eight of its picks underperform their sectors was especially painful in 2021. Why? All 11 S&P 500 sectors rose in the year. In fact, they all gained an average of more than 23%. BofA again misfired on its pick for the red-hot technology sector. The S&P 500's tech sector rose 29% in 2021, making it the No. 4 best sector in the S&P 500. But BofA's tech-stock choice, Qorvo, fell more than 11%, lagging the sector by 40 percentage points. BofA's top tech pick this year is F5. BofA's top pick in the leading S&P 500 energy sector missed the mark, too. The bank picked Chevron for 2021, and shares jumped more than 34% during the year. That lagged the amazing 44% rise by the sector during the year. BofA Calls S&P 500 Health Care Spot On Health care, though, is one sector BofA nailed in 2021. It chose HCA Healthcare for its top pick in the sector. Shares of the hospital company surged more than 54% in 2021, blowing away the sector's 21.6% rise by more than 30 percentage points. What's its best idea in health care for 2022? CVS Health. Analysts, too, think the drugstore chain's shares will rise more than 10% this year after soaring 47% in 2021. To be fair, BofA isn't hiding its difficult 2021 for stock picks. It pointed out the equal-weight return of its 2021 picks underperformed S&P 500 this year by more than 13 percentage points. But as with all years, BofA is certainly hoping 2022 will be different, and better. Most BofA's Top Stock Picks For 2021 Whiffed Eight of 11 lagged the S&P 500 in 2021 Company Symbol YTD % ch. Sector % ch. difference from S&P 500 sector (YTD) YTD % Ch. difference from S&P 500 HCA Healthcare 54.3% Health Care 32.7% 31.3% Vale S.A. -16.5% Materials -37.6% -39.5% Chevron 34.5% Energy -8.9% 11.5% Allstate 3.8% Financials -27.1% -19.2% Qorvo -11.2% Information Technology -40.3% -34.2% Hilton Worldwide 26.7% Consumer Discretionary 5.2% 3.7% Alaska Air Group -3.8% Industrials -19.5% -26.8% Realty Income 9.0% Real Estate -27.9% -14.0% NextEra Energy 17.9% Utilities 6.2% -5.1% Walmart -3.7% Consumer Staples -15.2% -26.7% Walt Disney -17.9% Communication Services -31.2% -40.9% SPDR S&P 500 ETF Trust 23.0% 0.0% Sources: BofA, S&P Global Market Intelligence Follow Matt Krantz on Twitter @mattkrantz |
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