In this article, we discuss 5 stocks that BofA is recommending. If you want to see more stocks in this selection, click BofA Is Recommending These 15 Stocks.
5. Archer-Daniels-Midland Company (NYSE:ADM)
Number of Hedge Fund Holders: 42
Archer-Daniels-Midland Company (NYSE:ADM) is an American producer of agricultural commodities and ingredients. The company operates through three segments – Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. On August 3, Archer-Daniels-Midland Company (NYSE:ADM) declared a quarterly dividend of $0.40 per share. The dividend will be distributed on September 7 to shareholders of the company as of August 17. Archer-Daniels-Midland Company (NYSE:ADM) is one of the top stocks in BofA’s September recommendations.
On August 12, Wolfe Research analyst Sam Margolin initiated coverage of Archer-Daniels-Midland Company (NYSE:ADM) with an Outperform rating and a $117 price target. The stock offers “highly competitive dividend growth” through its Nutrition segment, the analyst told investors in a research note.
According to Insider Monkey’s data, 42 hedge funds were long Archer-Daniels-Midland Company (NYSE:ADM) at the end of Q2 2022, and Tom Gayner’s Markel Gayner Asset Management held the leading stake in the company, with 1.46 million shares worth $113.5 million.
Here is what Diamond Hill Long-Short Fund has to say about Archer-Daniels-Midland Company (NYSE:ADM) in its Q1 2022 investor letter:
“ADM is a leading agricultural processor that also operates a global nutrition business focused on the development of ingredients and flavors for food and beverages, supplements and more. The company’s recent operating results have benefited (unfortunately) from the war in Ukraine as grain prices and agricultural markets globally experienced strong price increases. ADM is positioned well to benefit from the volatility due to its stable North American agricultural base.”
4. Simon Property Group, Inc. (NYSE:SPG)
Number of Hedge Fund Holders: 45
Simon Property Group, Inc. (NYSE:SPG) is an American real estate investment trust that invests in shopping malls, outlet centers, and community and lifestyle centers. Simon Property Group, Inc. (NYSE:SPG) on August 1 declared a $1.75 per share quarterly dividend, a 6.1% increase from its prior dividend of $1.65. The dividend is payable on September 30, to shareholders of record as of September 9. The dividend yield came in at 6.96% on September 5.
On August 15, Truist analyst Ki Bin Kim reaffirmed a Hold rating on Simon Property Group, Inc. (NYSE:SPG) and lowered the price target on the shares to $125 from $130, adjusting his model based on Q2 results, latest events, and revenue growth and expense assumptions.
Among the hedge funds tracked by Insider Monkey, 45 hedge funds were bullish on Simon Property Group, Inc. (NYSE:SPG) at the end of Q2 2022, up from 35 funds in the earlier quarter. Jim Simons’ Renaissance Technologies is the biggest stakeholder of the company, with 1.50 million shares worth $142.6 million.
Here is what Baron Real Estate Fund has to say about Simon Property Group, Inc. (NYSE:SPG) in its Q1 2022 investor letter:
“Following a share price gain of more than 97% in 2021, we recently trimmed the Fund’s holdings in Simon Property Group, Inc. (NYSE:SPG), the largest and premier mall operator in the U.S. Though we are also tempered by the expectation for modest earnings growth in 2022, we remain optimistic about the company’s long-term prospects. Simon owns A-quality malls in A-quality geographic locations. We expect Simon to benefit from the ongoing economic recovery and believe management is well positioned to acquire real estate assets given its strong balance sheet and low cost of capital.”
3. Amgen Inc. (NASDAQ:AMGN)
Number of Hedge Fund Holders: 55
Amgen Inc. (NASDAQ:AMGN) is a California-based manufacturer of human therapeutics, focusing on inflammation, oncology, hematology, bone health, cardiovascular disease, nephrology, and neuroscience. On August 3, Amgen Inc. (NASDAQ:AMGN) declared a $1.94 per share quarterly dividend, in line with previous. The dividend is payable on September 8, to shareholders of record on August 18. The company delivers a dividend yield of 3.20% as of September 5.
On August 8, Piper Sandler analyst Christopher Raymond reiterated an Overweight rating on Amgen Inc. (NASDAQ:AMGN) with a $265 price target. However, the analyst is disappointed about Lumakras plus PD-1 combo data, which displayed worse efficacy than expected, an overall response rate of 29% versus the 36% seen in monotherapy, and a new liver toxicity sign.
According to Insider Monkey’s data, 55 hedge funds were long Amgen Inc. (NASDAQ:AMGN) at the end of June 2022, compared to 56 funds in the last quarter. John Overdeck and David Siegel’s Two Sigma Advisors is the biggest stakeholder of the company, with 1.6 million shares of the company worth $404.2 million.
Here is what ClearBridge Sustainability Leaders Strategy had to say about Amgen, Inc. (NASDAQ:AMGN) in its Q3 2021 investor letter:
“In health care, Amgen, a biotechnology company, has endured several pipeline setbacks recently, including a slow transition of its Lumakras treatment into first-line lung cancer, a slower than expected development of its treatment for myeloma as well as the company’s asthma treatment Tezepelumab missing its primary endpoint in a Phase III study. We remain positive on the stock, with Amgen’s investments in biosimilars and its pipeline part of our long-term thesis.”
2. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 69
Micron Technology, Inc. (NASDAQ:MU) is an Idaho-based memory and storage products company, operating through four segments – Compute and Networking Business Unit, Mobile Business Unit, Storage Business Unit, and Embedded Business Unit. Micron Technology, Inc. (NASDAQ:MU) announced on September 1 a $15 billion investment to build a fabrication plant for leading-edge memory manufacturing in Boise, Idaho. This is the first in a series of investments by Micron Technology, Inc. (NASDAQ:MU) since the CHIPS Act was passed.
Deutsche Bank analyst Sidney Ho on August 10 reiterated a Buy rating on Micron Technology, Inc. (NASDAQ:MU) but lowered the price target on the shares to $68 from $70. The analyst is “not entirely surprised” by Micron Technology, Inc. (NASDAQ:MU)’s negative pre-announcement given the ongoing deteriorating inventory adjustments in the supply chain. He is encouraged that Micron Technology, Inc. (NASDAQ:MU) is now planning to significantly slash its fiscal 2023 capex and believes the shares are near a “trough.”
Among the hedge funds tracked by Insider Monkey, David Goel and Paul Ferri’s Matrix Capital Management is one of the leading position holders in Micron Technology, Inc. (NASDAQ:MU), with 4 million shares worth over $221 million. Overall, 69 hedge funds were bullish on the stock at the end of June.
Here is what Hazelton Capital Partners has to say about Micron Technology, Inc. (NASDAQ:MU) in its Q3 2021 investor letter:
“It’s hard to explain how shares of Micron Technology, manufacturer of DRAM and NAND semiconductor chips, can fall during a global chip shortage. In most industries, focusing on demand can give you a clear insight into what lays ahead for a company. Today, the memory and storage chip industry is no different. However, in the past, companies focused on market share led to the reckless build out of chip fabrication plants (FABs), oversupply, falling average selling prices (ASPs) of memory and storage chips, lower margins, and declining cash flows. As the industry consolidated – there are now just 3 major producers of DRAM and 5 on the NAND side – rational behavior among the key players began to take hold as competitors began focusing more on R&D. Currently, chip pricing remains cyclical although less so than in the past and that cyclicality has a long-term upward bias. The ongoing transition to newer and more robust platforms (3D 176-layer NAND & 1-Alpha node DRAM) has provided the memory and storage chip industry with improved supply capacity under its current manufacturing footprint, ultimately pressuring ASPs. Over the past three years, as most of the large platform conversions have already taken place, being able to add more bits per wafer has reached a saturation point. With no major FAB build outs planned in the near-term by competitors Samsung or SK Hynix, constrained supply and flattening cost curves should lead to durable and upward sloping ASPs once the recent volatility from the chip shortage subsides.
Currently Micron Technology trades at just 8x 2022 estimated earnings. MU is expecting growth in both DRAM and NAND not just from the supply of more chips to data centers, artificial intelligence, the auto sector, and mobile devices, but also from greater demand for gigabyte capacity per unit within those segments. With a healthy balance sheet, improving return on invested capital, and expanding cash flows, not only should Micron benefit from improving future earnings but its multiple should also reflect the transition to a flattening cost curve.”
1. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 191
Alphabet Inc. (NASDAQ:GOOGL) remains the stock longest on BofA’s list at 59 months. The company announced on September 1 that it will accept third-party payment services for mobile apps in countries including Japan and India, despite the foreign governments being concerned about Google’s market share in smartphone payments. The third-party payment services have not been activated entirely in the United States yet.
On August 3, Tigress Financial analyst Ivan Feinseth raised the price target on Alphabet Inc. (NASDAQ:GOOGL) to $186 from $183 and maintained a Strong Buy rating on the shares, noting that Q2 results highlight the resiliency of its primary Cloud and Search segments. He also said that the continued investment in Artificial Intelligence will create “increasingly focused and helpful experiences for users and businesses.”
According to Insider Monkey’s Q2 data, Alphabet Inc. (NASDAQ:GOOGL) was part of 191 hedge fund portfolios, compared to 205 funds in the last quarter. Chris Hohn’s TCI Fund Management is a significant position holder in the company, with approximately 2.5 million shares worth $5.4 billion.
Here is what Arch Capital specifically said about Alphabet Inc. (NASDAQ:GOOG) in its Q2 2022 investor letter:
“In May we decided to buy Alphabet Inc. (NASDAQ:GOOG) (parent company of Google, YouTube, and Android). Our thesis was simple. Alphabet has billions of locked-in users around the globe with businesses like Search, Maps, and YouTube that should grow in-line or faster than worldwide GDP. With all the cash these businesses generate, management is able to reinvest in Google Cloud, Other Bets projects like Waymo, and return cash to shareholders via share repurchases. At an enterprise value-to-free cash flow (EV/FCF) of around 20 at the time of our purchase, we believe this sets up shareholders for low risk 15%+ returns over the next five years.”
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