BANK OF AMERICA: Buy these 10 stocks to stay safe as economic growth inevitably slows down

  • Bank of America Merrill Lynch released a report Monday highlighting 10 “defensive” stocks set to outperform markets during economic downturns.
  • A collection of proprietary indicators point to continued weakness in economic growth, according to analyst Savita Subramanian.
  • BAML recommends stocks in the automotive and healthcare industries, among others.
  • Visit the Markets Insider homepage for more stories.

A Bank of America Merrill Lynch released a recent report citing a handful of economic indicators for growing fear of an economic downturn. The bank’s analysts recommend 10 stocks for investors who seek to insulate their portfolios from a weakening economy.

“High quality” and “defensive” stocks outperform their peers in slower growth environments, BAML analyst Savita Subramanian said in the Monday report. She added that the stocks are “less tied to cyclical pressures” and are underowned by active funds.

That offers an optimistic contrast to so-called crowded companies like Visa and Amazon, whose heavy ownership could intensify a market decline if everyone heads for the exits simultaneously.



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Several of the noted companies are tied to the automotive industry, ranging from Ferrari to parts retailer O’Reilly Automotive. Subramanian also includes Broadcom and Comcast, saying data usage, cloud computing, and the advent of 5G will keep the companies revenues steady amid potential recession.

The listed stocks have a 28% average implied upside according to the bank, and eight of the 10 companies have at least a “B+” S&P 500 common stock rank.

Here are the 10 companies highlighted in the report, listed in increasing order of implied upside from current levels. All data is sourced from Bank of America Merrill Lynch, and share prices reflect Friday’s close.


10. Broadcom

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Ticker: AVGO

Industry: Semiconductors and semiconductor equipment

Year-to-date return: 18.2%

Share price: $US300.90

BAML Price Target: $US345

Implied upside: 14.6%


9. Northrop Grumman

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Ticker: NOC

Industry: Aerospace and defence

Year-to-date return: 45.2%

Share price: $US352.50

BAML Price Target: $US405

Implied upside: 14.9%


8. Cerner

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Ticker: CERN

Industry: Health care technology

Year-to-date return: 40.2%

Share price: $US73.10

BAML Price Target: $US84

Implied upside: 14.9%


7. TJX Companies

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Ticker: TJX

Industry: Specialty retail

Year-to-date return: 24%

Share price: $US55.80

BAML Price Target: $US65

Implied upside: 16.6%


6. O’Reilly Automotive

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Ticker: ORLY

Industry: Specialty retail

Year-to-date return: 12.6%

Share price: $US383.80

BAML Price Target: $US450

Implied upside: 17.3%


5. Comcast

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Ticker: CMCSA

Industry: Media

Year-to-date return: 30.5%

Share price: $US44.60

BAML Price Target: $US58

Implied upside: 30%


4. Advance Auto Parts

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Ticker: AAP

Industry: Specialty retail

Year-to-date return: -3.6%

Share price: $US152.60

BAML Price Target: $US200

Implied upside: 31%


3. Ferrari

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Ticker: RACE

Industry: Automobiles

Year-to-date return: 65.7%

Share price: $US165.90

BAML Price Target: $US225.00

Implied upside: 35.7%


2. Centene

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Ticker: CNC

Industry: Health care providers and services

Year-to-date performance: -6.9%

Share price: $US53.40

BAML Price Target: $US75.00

Implied upside: 40.4%


1. Carmax

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Ticker: KMX

Industry: Specialty retail

Year-to-date return: 46.4%

Share price: $US91.20

BAML Price Target: $US150

Implied upside: 64.5%