Bank of America reveals its top stocks in Russia, Saudi Arabia and beyond

Published Thu, Jan 6 202210:30 PM EST

Bank of America 's top stock ideas for the first quarter of 2022 include a host of companies in Russia, South Africa and the Middle East. All of the stocks are rated "buy" by the bank. Aspen Pharmacare The bank likes South African pharmaceutical company Aspen Pharmacare for its "game-changing" licensing deal for the Johnson & Johnson Covid-19 vaccine in Africa, for which the company is free to determine the price in negotiations with African governments. An improved balance sheet and the proposed sale of the company's pharmaceutical ingredients business could also be a "positive move" for its margin mix, the bank added. The bank has a price target of 315 South African rand ($20) on the stock, which closed at around 233 South African rand on Jan. 5, representing a potential upside of 35%. Absa Bank of America believes South African financial services firm Absa is "comfortably" in the growth phase of its strategy. The company continues to grow its revenue and profitability, while outperforming its peers in costs, the bank said. BofA has ascribed a price target of 180 South African rand on the stock — an implied upside of 12% to its closing price of around 161 South African rand on Jan. 5. Abu Dhabi Commercial Bank The United Arab Emirates-based bank offers "attractive valuation" as it is set to deliver strong earnings and returns growth in the coming years, Bank of America said. Analyst Hootan Yazhari noted that the Abu Dhabi Commercial Bank is among the most rate-sensitive banks — positioning it well for margin uplift as global interest rates potentially rise in 2022. The bank's growth is also underpinned by strong improvement in asset quality, revenue, and cost synergies, Yazhari said. Bank of America has a price target of 10.10 Emirati dirhams ($2.75) on the stock, which closed at around 8.70 Emirati dirhams on Jan. 5, implying a potential upside of 16%. Alrosa Bank of America expects Russian mining giant Alrosa to benefit from its strong market position. The company is expected to post an 8.3% growth rate in production for 2021 from a year ago, with continued production growth into 2026, the bank said. A better sales mix and price growth for the company's diamonds are other positives cited by the bank, which has a price target of 155 Russian ruble ($2) on the stock. This represents a 29% upside to the stock's closing price of around 120 Russian ruble on Jan. 5. Eurobank The Athens-based bank is the first bank in Greece to have non-performing loans exposure of below 10%, Bank of America said. Eurobank has a "more resilient" income stream and higher structural profitability than its peers, it added. The U.S. bank has a price target of 1.15 euros ($1.30) on the stock, which closed at 0.91 euros on Jan. 4 — an implied upside of 26%. Gazprom Bank of America expects Russian energy giant Gazprom to be the "main beneficiary" of the recent surge in gas markets, with the bank forecasting "positive momentum" in prices and volumes this year. The bank has also projected "attractive" double-digit dividend yield in 2022 on the back of positive free cash flow. Bank of America has a price target of $13.50 on the stock, which closed at $9 on Jan. 5, representing a potential upside of 50%. Leejam Sports Saudi Arabian fitness chain operator Leejam Sports is expected to deliver a strong set of results in the first quarter of 2022 — its first quarter of full capacity since the onset of the coronavirus pandemic. The launch of the company's new "Xpress" gym — a low-cost format that is less capital intensive — will also help the company achieve an expansion of its free cash flow and lift margins, the bank said. Bank of America has a price target of 136 Saudi Arabian riyals ($36.20) on the stock, which closed at 107 Saudi Arabian riyals on Jan. 5 — an implied upside of 27%. Magnit Russian food retailer Magnit has made headway in its turnaround plan, Bank of America said. The bank expects the company to post "strong double-digit" growth in the next two years. It also noted the company's commitment to increase dividend payments each year. The bank has a price target of $22 on the stock, which closed at around $14.50 on Jan. 5, representing a potential upside of 52%. Sipchem Bank of America likes Sahara International Petrochemical for its "attractive valuation" and expects prices for the company's key products to remain "stable" over the next 12 months. The bank has a price target of 55 Saudi Arabian riyals on the stock, implying a potential upside of 31% to the stock's closing price of around 42 Saudi Arabian riyals on Jan. 5.

A Bank of America branch in San Francisco on Jan. 14, 2021.

David Paul Morris | Bloomberg | Getty Images

Bank of America's top stock ideas for the first quarter of 2022 include a host of companies in Russia, South Africa and the Middle East.