We recently compiled a list of the 10 Best Holding Company Stocks To Buy Now. In this article, we are going to take a look at where Bank of America Corporation (NYSE:BAC) stands against the other holding company stocks.
“The Market is Anticipating Too Much”
Some may think the Fed meeting on the 18th of September may have put an end to the basis point cut debate, however, while the Fed did initiate a rate cut by half a percentage, two Fed meetings are remaining before the end of 2024. To discuss the likely rate cut path, Chris Versace, Tematica Research CIO, appeared in an interview on Yahoo Finance on September 24.
Versace suggests that it is quite impossible to predict the path the Fed is to adopt before 2024 ends and the decision will likely be more reliant on data. The labor market weakened for the second consecutive month and, according to him, the Fed will probably go for another 50 basis point cut, if not more.
He urges investors and traders to triangulate all data points to make decisions including economic data, inflation data, and the speed at which the economy is growing. Versace states that the market right now is stretched and that there is more to the bigger picture such as the upcoming elections, earnings growth, and the Fed’s decisions.
“Volatility Should Remain Elevated”
On September 25, Burns McKinney, NFJ Investment Group Managing Director & Senior Portfolio Manager, appeared in an interview on Yahoo Finance to discuss the market outlook. Amid declining consumer confidence and a shrinking job market, volatility, according to him, will remain a constant element.
He suggested that signs of job weakness coupled with inflation have impacted consumer confidence negatively, especially after the Fed’s decision. McKinney added that there is a disequilibrium in the number of jobs vacant and the number of workers available right now, leading to weakened employment data.
From an investor standpoint, he deems volatility a constant state of the market, given that the country also has an upcoming election in the coming weeks. In addition to that, geopolitical tensions in Europe and the Middle East will likely add to the turmoil. McKinney shares that investors should focus more on dividend-paying stocks to remain secure and resilient through the volatility.
Despite the turmoil, some stocks may always be promising given their strong footing and dominance in the industry. With that, let’s take a look at the 10 best holding company stocks to buy now.
Our Methodology
To come up with the 10 best holding company stocks to buy now, we examined multiple rankings on the internet and our rankings. We then ranked the top 10 based on the largest number of hedge fund holders at the end 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)
Number of Hedge Fund Holders: 92
Bank of America Corporation (NYSE:BAC) is a financial services company that ranks fourth on our list of the best holding company stocks to buy now. The company provides investment and wealth management services to individuals, institutions, small to medium-sized businesses, large corporations, and the government through its subsidiaries such as Merrill, BofA Securities, and Bank of America Private Bank.
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.
The company is also among the top credit card issuers in the United States and ownsone of the most solid retail networks. Bank of America Corporation (NYSE:BAC) is a dominant player and we say that because of its 69-million-individual customer base, 3,800 retail locations, and 15,000 ATMs across the United States.
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 4th on our list of the best holding company stocks to buy. 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.
