Bank of America Merrill Lynch told clients to buy stocks that will benefit from future government fiscal stimulus as populist political ideology gains favor.
"Electorates are increasingly voting for policies to address wage deflation, immigration and inequality. The capitalist, monetarist, globalist consensus of recent decades is now under threat and policies that are more socialist, Keynesian, and protectionist are being promised," BofAML's chief investment strategist, Michael Hartnett, wrote in a note to clients Sunday.
"We have argued over the past year that investors must anticipate this 'policy flip' from monetary to fiscal stimulus by shifting from Wall Street to Main Street plays."
Hartnett cited how it has never been less expensive for government to "fund investments in transportation and information infrastructure" due to low interest rates. He recommends investors look for companies with the most leverage to fiscal stimulus spending especially in the defense, infrastructure and real asset areas.
"BofAML's Global Economics team believe that after several years of government belt tightening, fiscal stances around the world have already become more supportive of growth and that the prospects for additional fiscal stimulus have improved in a number of countries," the report said.
Here is a selection of 10 buy-rated stocks Bank of America Merrill Lynch recommends on the fiscal stimulus theme.