We recently compiled a list of 10 Most Promising Long-Term Stocks According to Hedge Funds. In this article, we will look at where Bank of America Corporation (NYSE:BAC) ranks among the most promising long-term stocks according to hedge funds.
Another 50 bps Cut is Still Restrictive
The labor market has been more resilient than ever. On October 4, Gary Cohn, the IBM vice chairman, and former US National Economic Council director in the Trump administration, appeared in an interview on Yahoo Finance to discuss the job report and the US economy.
Cohn suggests that the jobs data is the least scientific information the government puts out and therefore, it must be taken with a grain of salt. However, he emphasizes the importance of understanding trends. The number of people entering the workforce is expanding and jobs are being created, deducing that the market is in a neutral place.
Cohn believes that the US economy is normalizing. He reveals that we have not lived in a normal economy in over a decade, therefore, relative to history, the status quo is fairly reasonable. He adds that the Fed has orchestrated a soft landing and expects another 50 basis point cut before the end of 2024, which according to him is still restrictive.
Portfolio Manager Highlights High Growth Sectors
As the AI flame starts to settle, the market may be up for a major shift. On October 7, Keith Buchanan, GLOBALT Investments senior portfolio manager, appeared in an interview on Yahoo Finance to discuss his expectations of the market.
Expectations for earnings have been revised from mid-single digits to mid-double digitals, promising robust growth as 2024 comes to a close. Buchanan suggests that most of the growth comes from artificial intelligence and the widening of earnings growth beyond traditional growth sectors like technology.
This year, the industrial and energy sectors have enjoyed greater returns capturing a large chunk of the market. Buchanan is highly bullish on AI plays and value stocks. He also adds that names in financials, industrials, and consumer discretionary are poised for growth ahead of 2024. He advises investors to consider geopolitical events before making any investment decisions.
Now that we have assessed the future of the financial markets and possible sectors eyeing growth, let’s take a look at the 10 most promising long-term stocks according to hedge funds.
Our Methodology
To find the most promising long-term stocks according to hedge funds, we went over multiple rankings over the internet to list long-term blue chip stocks. We then examined the analyst upside and the hedge fund sentiment of these stocks as of Q2 2024 and picked the most popular ones. The stocks are sorted in ascending order of the number of hedge fund holders as of Q2 2024 as a primary metric and analyst upside as of October 13, as a secondary metric.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 92
Analyst Upside as of October 13, 2024: 10%
Bank of America Corporation (NYSE:BAC) is a financial services company that provides investment and wealth management services to individuals, institutions, small to medium-sized businesses, large corporations, and the government. Some of its subsidiaries include Merrill, BofA Securities, and Bank of America Private Bank.
The company is a leading credit card issuer in the United States that has a strong retail network. The company has over 3,800 retail locations and 15,000 ATMs across the United States servicing a large clientele of 69 million individual customers. Bank of America now manages $5.7 trillion in client balances, loans, deposits, and investments in its consumer and wealth management segments.
During the second quarter of 2024, Bank of America Corporation (NYSE:BAC) added another 278,000 checking accounts to its system, bringing the fiscal half-year 2024 total to 500,000. Its expansion trajectory is ever-growing. By the end of 2026, BofA is set to open an additional 165 financial centers, and 40 by the end of this year.
Bank of America Corporation (NYSE:BAC) is one of the best long-term stocks according to hedge funds and we say that because of its strong ecosystem that is deeply integrated into the lives of individual customers and institutions alike. According to the Insider Monkey database, at the end of Q2, 92 hedge funds were bullish on the stock.
ClearBridge Investments’ ClearBridge Value Equity Strategy stated the following regarding Bank of America Corporation (NYSE:BAC) in its first quarter 2024 investor letter:
“We added several new positions during the quarter. Our largest new addition was Bank of America Corporation (NYSE:BAC), one of the world’s leading financial institutions, serving some 66 million consumer and small business clients across the U.S. as well as large corporations, financial institutions and governments globally. We believe that the interest rate pressure that Bank of America faced in early 2023 has subsided, and risks surrounding deposit outflows have abated, which should allow the company to improve its book value and capital growth as well as benefit from a rebound of capital markets activity.”
Overall BAC ranks 8th on our list of the most promising long-term stocks according to hedge funds. While we acknowledge the potential of BAC as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BAC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published on Insider Monkey.