Bank of America has named a raft of European "boom stocks" it believes will continue to do well after a strong start to the year. The bank says we're currently in a "boom phase" — marked by rising inflation and bond yields alongside weaker growth — and this could benefit certain stocks. "In the 'boom' phase, we prefer small over large caps, low quality, high risk and rising momentum," Bank of America Strategist Paulina Strzelinska said on Jan. 20. She noted that the bank's top "boom stocks" have continued to deliver strong returns so far this year (month-to-date returns of 10%), after outperforming the market by 7.5% in 2021. These stocks are also trading at a 44% discount to the market compared to the long-term average, she said, indicating that this could be an attractive entry point for investors interested in these stocks. Stock picks The bank's screen for top "boom stocks" is overweight the financial services, energy, and materials sectors. "While the positioning is elevated for banks, the other Boom-preferred sectors (materials and energy) are not yet overcrowded," Strzelinska added. Bank of America's top picks in financial services include Germany's Deutsche Bank and Italy's UniCredit , British banks NatWest , Barclays, Lloyds and Standard Chartered , as well as France's Credit Agricole and Societe Generale , Dutch financial services firm ING . The bank's picks within the energy space include French energy firm TotalEnergies , Norwegian energy firm Equinor , Italian oil major Eni as oil behemoth BP . The bank also likes German chemicals maker Covestro , Danish shipping giant Moller- Maersk , German carmaker BMW , Anglo-swiss mining company Glencore , as well as the world's largest steelmaker ArcelorMittal .
A Bank of America branch in San Francisco on Jan. 14, 2021.
David Paul Morris | Bloomberg | Getty Images
Bank of America has named a raft of European "boom stocks" it believes will continue to do well after a strong start to the year.