We recently compiled a list of the 7 Best Stocks for Beginners with Little Money According to Analysts. In this article, we are going to take a look at where Bank of America Corporation (NYSE:BAC) stands against the other beginner stocks.
On one hand, some investors view the status quo as a bear market, and on the other, some analysts hold a bullish view. While caution is necessary, blue chip stocks with historically solid results have an edge in the risk department.
The Status Quo Calls for Safer Investing
Geopolitical tensions on the one hand and economic turmoil on the other, have created a concerning situation for investors. On September 3, Tom Lee, Fundstrat Global Advisors managing partner and head of research, appeared in an interview on CNBC to share his outlook of the market. Lee is particularly concerned about the job market, the surprise inflation has in store for the economy, and weak growth projections.
Lee emphasized that investors must remain cautious for the next eight weeks or so, especially with elections and rate cuts, he predicts that the general public is bound to be nervous and confused. While his timeline may not be exact, he expects economic conditions and political turmoil to settle within the suggested time frame.
He further added that it is safer to be cautious than to make hasty decisions at the moment. He also stated that the oil industry is particularly weak due to geopolitical tensions despite a massive rise in production. Lee added that increasing production levels does not indicate a booming global economy, because, previously, production increased only because prices were rising which led to more drilling and activity in the sector.
Lee recommended that investors will be able to buy long, and therefore it is best to remain cautious. He further added that we already had 7% corrections twice this year, and there is a possibility of another 7% to 10% correction in the market. He did agree that the market is currently testing investors’ patience and he predicts something close to a 5% pullback.
How Must Investors Navigate Moving Forward?
On September 6, Liz Ann Sonders, Charles Schwab’s chief investment strategist, appeared in an interview on CNBC to discuss how investors should navigate the market right now. Sonders held a particularly bullish view of the market. She further added that while there has been significant weakness and churn on the surface, it is concealed by cap-weighted index returns.
Sonders suggested that the market level declines were most likely a set-up for the broadening out we have witnessed. She shared her point of view on the market, which is rather bullish, and emphasized that stocks in the consumer discretionary, technology, and communication services sectors are doing particularly well. Sonders, however, did point out that the market may see an exhaustion in the mega-cap tech trade.
She then suggests that investors must let go of the perception that to succeed they must invest in mega-cap tech stocks. She states that there are a myriad of opportunities outside of the mega-cap tech that are high quality. Finally, Sonders believes that a recession is not on the cards and that the current situation is nothing more than a growth scare.
Now that we have assessed the market, let’s take a look at the 7 best stocks for beginners with little money according to analysts. You can also take a look at the best defensive stocks to buy.
Our Methodology
To come up with the 7 best stocks for beginners with little money according to analysts we sifted over multiple similar rankings and ETFs to come up with safe and blue chip stocks. The rationale behind this was that investors with little money don’t afford to lose a lot and are more likely to invest in stocks that are safer or risk-free. We then sorted our stocks based on their upside potential. We have also included the hedge fund sentiment around each stock, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Bank of America Corporation (NYSE:BAC)
Analyst Upside as of September 10: 15%
Number of Hedge Fund Folders: 92
Bank of America Corporation (NYSE:BAC) is a financial services company that ranks sixth on our list of the best stocks for beginners with little money according to analysts. The company is a multinational investment and wealth management bank that provides services to individuals, institutions, small to medium-sized businesses, large corporations, and the government.
The Tier 1 investment company is among the top credit card issuers in the United States and has one of the best retail networks across the country. The company provides its services across four major segments including Global Wealth and Investment Management, Global Banking, Global Markets, and Consumer Banking.
In the second quarter of 2024, Bank of America Corporation (NYSE:BAC) added another 278,000 net new checking accounts, bringing its fiscal half-year 2024 total to 500,000. As for the wealth management segment, the company maintained 6,100 new relationships and added thousands of small businesses in its commercial business sector. Bank of America now manages $5.7 trillion in client balances, loans, deposits, and investments in its consumer and wealth management segments.
Bank of America Corporation’s (NYSE:BAC) position in the market is evident from its 69-million-individual customer base, 3,800 retail locations, and 15,000 ATMs across the United States. Overall, the company has 58 million verified digital users, with 47 million active mobile users. Bank of America also opened 11 new financial centers during the quarter and renovated another 243.
Analysts are also bullish on BAC and their 12-month median price target of $45.5 points to a 15% upside from current levels. In Q2 2024, there were 92 hedge funds that held positions in the stock with total stakes amounting to $48.1 billion. As of June 30, Berkshire Hathaway was the largest shareholder with a position worth $41.1 billion.
ClearBridge Investments’ ClearBridge Value Equity Strategy stated the following regarding Bank of America Corporation (NYSE:BAC) in its first quarter 2024 investor letter:
“We added several new positions during the quarter. Our largest new addition was Bank of America Corporation (NYSE:BAC), one of the world’s leading financial institutions, serving some 66 million consumer and small business clients across the U.S. as well as large corporations, financial institutions and governments globally. We believe that the interest rate pressure that Bank of America faced in early 2023 has subsided, and risks surrounding deposit outflows have abated, which should allow the company to improve its book value and capital growth as well as benefit from a rebound of capital markets activity.”
Overall BAC ranks 6th on our list of the best beginner stocks to buy according to analysts. While we acknowledge the potential of BAC as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BAC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.