BANK OF AMERICA: These Are The 10 Best Stocks For 2013

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Bank of America Merrill Lynch’s Equity and Quant Strategy team, led by Savita Subramanian, is bullish on stocks.  Their year-end target for the S&P 500 in 2013 is 1600 is one of the most optimist on Wall Street.Yesterday, Subramanian published the team’s list of “10 Stocks For 2013,” which align with their investment themes for the upcoming year.

The stocks meet three criteria: 1) Buy-rated by a BAML analyst; 2) favourable metrics including valuation, quality, dividend growth, foreign exposure, and GDP sensitivity; and 3) BAML’s fundamental analysts approve.

Although past performance is no guarantee of future performance, it’s worth noting that Bank of America’s list from last year has outperformed the S&P 500 averaging an 18 per cent year-to-date return thus far.

Ford Motor Co.

Ticker: F

Price Target: $20.00

2013 EPS Growth: +15.4%

Sector: Consumer Discretionary

Ford was selected due to high foreign sales and a large amount of pent-up demand.

Source: Bank of America Merrill Lynch

Wal-Mart Stores Inc.

Ticker: WMT

Price Target: $85.00

2013 EPS Growth: +9.6%

Sector: Consumer Staples

The team believes Wal-Mart is underowned by funds and offers a combination of high quality and high dividend growth.

Source: Bank of America Merrill Lynch

Valero Energy Corp.

Ticker: VLO

Price Target: $46.00

2013 EPS Growth: +77.7%

Sector: Energy

Merrill Lynch expects an increase in cash returns for Valero stockholders in 2013 through dividends and buybacks.

Source: Bank of America Merrill Lynch

Citigroup Inc.

Ticker: C

Price Target: $45.00

2013 EPS Growth: +15.5%

Sector: Financials

Citi is an underappreciated beneficiary of the housing recovery and remains inexpensive and underowned by active managers.

Source: Bank of America Merrill Lynch

Eli Lilly & Co.

Ticker: LLY

Price Target: $57.00

2013 EPS Growth: +11.5%

Sector: Health Care

Eli Lilly & Co is underowned by active managers and is a part of Merrill Lynch's preferred inexpensive high dividend yield play.

Source: Bank of America Merrill Lynch

3M Co.

Ticker: MMM

Price Target: $113.00

2013 EPS Growth: +8.5%

Sector: Industrials

Merrill Lynch is encouraged by new CEO Inge G. Thulin's focus on increasing profit margins to accelerate growth.

Source: Bank of America Merrill Lynch

Cisco Systems Inc.

Ticker: CSCO

Price Target: $24.00

2013 EPS Growth: +7.6%

Sector: Technology

The team calls Cisco a GDP-sensitive stock which offers high quality and dividend growth backed by strong foreign sales.

Source: Bank of America Merrill Lynch

Mosaic Co.

Ticker: MOS

Price Target: $63.00

2013 EPS Growth: +0.7%

Sector: Materials

Mosaic is well positioned if there is a rebound in the global demand for potash, which Merrill Lynch suggests is likely.

Source: Bank of America Merrill Lynch

CenturyLink Inc.

Ticker: CTL

Price Target: $50.00

2013 EPS Growth: +2.2%

Sector: Telecom Services

Merill Lynch believes CenturyLink offers better dividend growth and dividend yield than its peers in the industry.

Source: Bank of America Merrill Lynch

Northeast Utilities

Ticker: NU

Price Target: $44.00

2013 EPS Growth: +8.8%

Sector: Utilities

The team highlights Northeast Utilities' transmission and distribution system as among the best positioned in the market.

Source: Bank of America Merrill Lynch

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