Bank of America's top stock ideas for the fourth quarter

Published Mon, Oct 2 202310:52 AM EDTUpdated Mon, Oct 2 202312:51 PM EDT

Bank of America is eyeing a tranche of stocks that could benefit from both market and business catalysts heading into the fourth quarter. September was the worst month of 2023 for both the S & P 500 and the Nasdaq Composite, slipping 4.9% and 5.8%, respectively. The 30-stock Dow Jones Industrial Average was also lower in September, falling 3.5% from the start of the month. The sell-off was somewhat typical of a historically weak month on Wall Street, but all three major indexes are still on track for gains from the start of the year. Here's what stocks Bank of America is watching for the quarter ahead. All stocks included on this list have a buy rating from BofA Securities. Aerospace behemoth Boeing made the cut for the BofA list, accompanied by a $300 per share price target. The firm's forecast implies nearly 57% upside from Friday's $191.68 close. Shares of Boeing have ticked up 0.6% from the start of the year. "We anticipate Boeing 737 demand to remain robust as much of the global passenger fleet remains capacity constrained," BofA analyst Ronald Epstein said. "Despite near term challenges to ramp up production rates, Boeing is poised to unlock significant [free cash flow] generation as improving production and profitability levels are coupled with ~$17bn of excess 737/787 inventories wind down over the next three years." BA YTD mountain Boeing stock. Boeing Chief Executive Officer Dave Calhoun recently touted the resilience of a rebound in travel demand and noted the company's "robust" order books. Rail transportation company CSX stock is down more than 2% from the start of the year. Despite a second-quarter earnings miss in July, Chief Executive Officer Joseph Hinrichs remained upbeat on the company's U.S. intermodal business and said the company is adding new shippers to its network. Bank of America's $38 per share price target implies about 24% upside from Friday's $30.75 close. CSX YTD mountain CSX Corp stock. "We view CSX's service gains as a key growth driver in winning volume share and from highway freight," analyst Ken Hoexter said. "We expect earnings to inflect higher from 3Q, which we view as an earnings trough, given rising met coal prices leading export coal yields, increasing fuel surcharge aiding all-in pricing, and improving volumes driven by service gains." Kraft Heinz stock has slumped more than 18% from the start of the year, with executives citing inflation pressures as hampering customer spending after the food company raised prices earlier this year. The company recently appointed North American president Carlos Abrams-Rivera as its new chief executive officer, effective Jan. 1, 2024. KHC YTD mountain Kraft Heinz stock has declined more than 17% so far in 2023. Bank of America's $48 per share price target implies nearly 43% upside from Friday's $33.64 close. "KHC's 2023 outlook appears the most prudent/conservative in the sector and our sense is that some cushion has been baked into EBITDA forecasts for the year," analyst Bryan Spillane said. — CNBC's Michael Bloom contributed to this report.

A man walks by the Bank of America headquarters in New York on July 18, 2023.

Eduardo Munoz | View Press | Getty Images

Bank of America is eyeing a tranche of stocks that could benefit from both market and business catalysts heading into the fourth quarter.

September was the worst month of 2023 for both the S&P 500 and the Nasdaq Composite, slipping 4.9% and 5.8%, respectively. The 30-stock Dow Jones Industrial Average was also lower in September, falling 3.5% from the start of the month.

The sell-off was somewhat typical of a historically weak month on Wall Street, but all three major indexes are still on track for gains from the start of the year.

Here's what stocks Bank of America is watching for the quarter ahead. All stocks included on this list have a buy rating from BofA Securities.

Bank of America's stock ideas for the fourth quarter

Source: Bank of America Securities

Aerospace behemoth Boeing made the cut for the BofA list, accompanied by a $300 per share price target. The firm's forecast implies nearly 57% upside from Friday's $191.68 close. Shares of Boeing have ticked up 0.6% from the start of the year.

"We anticipate Boeing 737 demand to remain robust as much of the global passenger fleet remains capacity constrained," BofA analyst Ronald Epstein said. "Despite near term challenges to ramp up production rates, Boeing is poised to unlock significant [free cash flow] generation as improving production and profitability levels are coupled with ~$17bn of excess 737/787 inventories wind down over the next three years."

Boeing stock.

Boeing Chief Executive Officer Dave Calhoun recently touted the resilience of a rebound in travel demand and noted the company's "robust" order books.

Rail transportation company CSX stock is down more than 2% from the start of the year. Despite a second-quarter earnings miss in July, Chief Executive Officer Joseph Hinrichs remained upbeat on the company's U.S. intermodal business and said the company is adding new shippers to its network.

Bank of America's $38 per share price target implies about 24% upside from Friday's $30.75 close.

CSX Corp stock.

"We view CSX's service gains as a key growth driver in winning volume share and from highway freight," analyst Ken Hoexter said. "We expect earnings to inflect higher from 3Q, which we view as an earnings trough, given rising met coal prices leading export coal yields, increasing fuel surcharge aiding all-in pricing, and improving volumes driven by service gains."

Kraft Heinz stock has slumped more than 18% from the start of the year, with executives citing inflation pressures as hampering customer spending after the food company raised prices earlier this year.

The company recently appointed North American president Carlos Abrams-Rivera as its new chief executive officer, effective Jan. 1, 2024.

Kraft Heinz stock has declined more than 17% so far in 2023.

Bank of America's $48 per share price target implies nearly 43% upside from Friday's $33.64 close.

"KHC's 2023 outlook appears the most prudent/conservative in the sector and our sense is that some cushion has been baked into EBITDA forecasts for the year," analyst Bryan Spillane said.

— CNBC's Michael Bloom contributed to this report.