Bank of America just named its top small cap stocks for the second half of 2021.
The small cap benchmark Russell 2000 is starting to rebound after a more than 4% drop last week. Smaller names declined and larger growth stocks outperformed as the threat of higher short-term rates slowing the recovery caused investors to reassess cyclical stocks linked to the economy. However, the index has returned more than 2% this week in a sign of a comeback.
Bank of America highlighted buy-rated small and midcap stocks with a market capitalization of at least $1 billion. The names also need daily liquidity of at least $20 million traded per day.
The Wall Street firm's list includes some reopening and post-pandemic names, high-quality stocks and names with pricing power in an inflationary backdrop. Plus, the bank has some catalyst-driven ideas.
"These represent stocks that our contributing fundamental research teams would consider their best ideas for 2021 within their [small and mid] cap coverage," Bank of America quant and equity strategist Jill Carey Hall told clients.
The list has an average implied upside of 28% to the firm's 12-month price targets. Take a look at the stocks here.