The year got off to a bumpy start for investors, and the S&P 500 is now down 5.6% year-to-date in 2022. But while investors are growing increasingly concerned about inflation, rising interest rates and supply chain disruptions and geopolitical tension stemming from the war in Ukraine, Bank of America analysts have said there are plenty of excellent investing opportunities in the second quarter.
Bank of America's recently-released quarterly list of top stock picks for the next three months includes nine stocks to buy that have bullish catalysts coming in the second quarter.
Alaska Air Group, Inc. ALK
Alaska Air is already off to a strong start to the year as investors anticipate a sharp rebound in travel in 2022.
Analyst Andrew Didora says Alaska is 50% hedged against surging fuel costs, and it's highly exposed to leisure travel, a trend he expects will dominate the industry in the next three months. In addition to its earnings report coming in late April, Alaska's second-quarter catalysts include incremental revenue opportunities and valuable hedges in the event of higher fuel prices.
Bank of America has a Buy rating and $70 price target for ALK stock.
Advanced Micro Devices, Inc. AMD
Advanced Micro Devices is one of the world's leading semiconductor producers.
Despite AMD's 54% compound annual sales growth in the PC and server markets over the past five years, analyst Vivek Arya says the company still holds just 15% total market share. Second-quarter catalysts include AMD's first-quarter earnings report in late May and its Analyst Day event on June 9.
Bank of America has a Buy rating and $190 price target for AMD stock.
Camden Property Trust CPT
Camden Property Trust is a residential REIT that owns and operates one of the largest multifamily portfolios of properties in the U.S. Sun Belt region.
Analyst Joshua Dennerlein says Camden is well-positioned for the second quarter given elevated demand in the Sun Belt region and strong historical seasonal Spring leasing trends. Upcoming catalysts include Bank of America's REITweek event in June and any potential property acquisitions given Camden's pristine balance sheet.
Bank of America has a Buy rating and $200 price target for CPT stock.
D R Horton Inc DHI
D.R. Horton is one of the largest publicly traded U.S. homebuilders. Despite rising mortgage rates, analyst Rafe Jadrosich says supply chain disruptions are ongoing and housing construction backlogs remain packed. Second-quarter catalysts include D.R. Horton's earnings report in late April, as well as incremental growth opportunities in build-to-rent properties.
Bank of America has a Buy rating and $108 price target for DHI stock.
Lululemon Athletica Inc LULU
Lululemon Athletica is a leading specialty retailer of athletic apparel.
Analyst Lorraine Hutchinson says Lululemon's accelerating sales growth rate in 2022 should eliminate the bear thesis that the company's exceptional performance in recent years was pandemic-driven. Upcoming catalysts include continued strength in running, yoga, training and on the move demand, as well as the company's upcoming investor day event on April 20.
Bank of America has a Buy rating and $450 price target for LULU stock.
Signature Bank SBNY
Signature Bank is a full-service commercial bank that serves privately-held businesses in the New York metro area, as well as in Connecticut, North Carolina and California.
Analyst Ebrahim Poonawala says Signature's consensus earnings estimates have significant upside as the Federal Reserve moves to aggressively raise interest rates in coming months. Second-quarter catalysts include rising interest rates given Poonawala estimates each 1% rise in interest rates will boost Signature's EPS by 24%.
Bank of America has a Buy rating and $450 price target for SBNY stock.
Teledyne Technologies Incorporated TDY
Teledyne Technologies is a defense, aerospace, and industrial technology company focused primarily on sensing and imaging products as well as electronic control systems.
Analyst Ronald Epstein says investors have underestimated Teledyne's operational excellence and its high exposure to rising defense budgets. Second-quarter catalysts include potential M&A deals and increasing pricing power.
Bank of America has a Buy rating and $600 price target for TDY stock.
Target Corporation TGT
Target is a diversified, big-box discount retailer with nearly 2,000 U.S. stores.
Analyst Robert Ohmes says Target is his top retail stock pick given the company's strategy to make its stores fulfillment hubs is clearly working. In addition to its earnings report expected in mid-May, second quarter catalysts include Target's same-day services expansion and its market share gains in the food and beverage categories.
Bank of America has a Buy rating and $289 price target for TGT stock.
Valero Energy Corporation VLO
Valero Energy is a leading independent petroleum refiner and marketer with a strong presence in the Gulf Coast, the hub of the U.S. petrochemical refining complex.
Analyst Doug Leggate says U.S. refiners are on the brink of another "Golden Age" similar to the one they experienced in the mid-2000s. Second-quarter catalysts include widening clean-dirty spreads and further balance sheet improvements from debt repayments.
Bank of America has a Buy rating and $135 price target for VLO stock.
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