Bank of America picks 8 stocks to outperform in the second quarter

Published Thu, Apr 1 202110:43 AM EDT

Lucy Handley @in/lucy-handley-b2b0a61a/@lucyhandley

Analysts from Bank of America have picked a raft of stocks to buy in the second quarter, choosing assets in sectors including semiconductors and energy, and those likely to benefit from an economic reopening post-pandemic. The Wall Street firm picks its "high conviction, short-term" ideas at the start of each quarter based on market and business-related trends. Led by Anthony Cassamassino, BofA's analysts picked the following buy-rated stocks: Booking Holdings , which owns the Booking.com travel reservation site, is a "top recovery play" for BofA due to the vaccine rollout in Europe and the resulting growth in travel. The bank also said it has potential in North America, Asia and Latin America. Disney suffered during the coronavirus pandemic last year as theme parks shuttered and advertising declined, but BofA said the "pent up" desire to travel will mean a rapid recovery for profits. The rollout of streaming platform Disney+ has been a "resounding success" and BofA likes its "high-quality" intellectual property. Gold miner Newmont Corporation has rising production and declining costs, according to BofA, and it is the bank's top pick in the North American precious metals sector for the year ahead. The analysts said it has a "leading" dividend and is "historically undervalued." NXP Semiconductor is a "global leader" in automotive semis that is set to benefit from growth in electric vehicle batteries and advanced driver assistance systems. Chip shortages could mean customers stockpile their supply, which could provide "secondary growth tailwinds," according to BofA. Auto parts retailer O'Reilly Automotive is an "underappreciated" reopening stock that's in a "sweet spot," according to BofA. The bank likes its mix of professional and do-it-yourself customers and expects its upcoming earnings to beat consensus estimates. It said the stock has a potential upside of 18%. Motion and control tech manufacturer Parker Hannifin is an emerging "best-in-class operator" according to BofA, which expects EBITDA (earnings before interest, taxes, depreciation and amortization) to be above its peers in 2021 and 2022. The bank also likes the fact that it is reducing debt. Oil industry services company Schlumberger is a pick for its exposure to international markets and BofA said it could see a "snapback" recovery from the summer. The bank also likes its move into lithium batteries and carbon capture, which it said is currently "underappreciated." Medical tech company Stryker is "incredibly well positioned" to benefit from market recovery in the U.S., U.K. and Australia and from capital spending by hospitals, according to the bank. There is "more opportunity than investors realize" in margins and free cash flow, BofA's analysts added.

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The Wall Street firm picks its "high conviction, short-term" ideas at the start of each quarter based on market and business-related trends.

Led by Anthony Cassamassino, BofA's analysts picked the following buy-rated stocks: