BofA: These Stocks Are Primed to Outperform

Income & Prosperity Investing Research
by 

Savita Subramanian is a strategist at Bank of America.

And in a new note to clients, she made the case for value stocks.

She said there are three scenarios where value should be the preferred area of the stock market to own.

Here’s the three scenarios according to her:

  1. Broader Earnings Growth – After years of low investment and inflation, companies focused on efficiency will drive more widespread earnings growth in the S&P 500 through 2025. This means it won’t just be the mega-cap tech companies driving earnings growth and higher stock prices. Value sectors like energy and financials, which have been starved for capital, should see gains as they catch up in earnings growth.
  • A Hard Landing – If the economy takes a downturn, value stocks are expected to outperform. Growth stocks would likely see a sharp sell-off, leading to value stocks holding up better. With high equity allocations, a move from stocks to bonds would likely impact growth stocks more than value stocks.
  • A 5% Interest Rate World – In a higher interest rate environment, value stocks should benefit and outperform growth stocks. The bank noted that value stocks have lagged significantly in the past due to low interest rates and other factors. Higher rates and inflation should support value stocks, potentially leading to a five percentage point annual outperformance compared to growth stocks.

That’s why Bank of America is recommending investors to consider four sectors ETFs that are value oriented: utilities, energy, banks, and consumer staples.

It’s no secret that tech companies are fighting to win the AI race.

That’s why “hyperscalers” like Amazon, Meta Platforms and Google are making huge investments to upgrade existing datacenters. And they’re also building new AI factories across the world.

Just this year Amazon will invest $38 billion… Google $49 billion… and Microsoft $52 billion in capital spending.

The problem is…

Artificial Intelligence uses a HUGE amount of electricity. 

America’s power grid simply doesn’t have extra capacity. It’s already causing major problems.

The good news is that there’s a new breakthrough called Hyper Power 2.0.

This innovation is already attracting huge investments…

With Warren Buffett… Bill Gates… and Sam Altman investing billions. 

Amazon and Microsoft are already placing big bets.

Yours in Wealth,

Ian Wyatt

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