We recently published a list of Starter Stock Portfolio 12 Safe Stocks to Buy. In this article, we are going to take a look at where Bank of America Corporation (NYSE:BAC) stands against other best beginner stocks.
The US stock market has experienced a turbulent first quarter of 2025, marked by increased volatility and negative returns across the major indices. Concerns surrounding tariffs, economic data, and the performance of key technology stocks contributed to this challenging period for investors.
The year began with the revelation of DeepSeek, an Artificial Intelligence (AI) software developed in China, which rivalled its US competitors, such as ChatGPT. The software was considered revolutionary compared to others, sending shockwaves across the global markets. Reuters reported a global investor sell-off across US indexes, with one of the major tech companies alone losing $593 million in one day.
The US government was quick to implement policies that are aimed to promote US-listed tech firms while simultaneously reducing the impact of the DeepSeek AI, such as the use of tariffs against trade with Chinese firms.
The uncertainty of the US economy added to the market volatility after the Federal Reserve announced it would maintain interest between 4.25% and 4.50% in the short term. The banking sector, which is considered a good investment during times of high interest rates, is not completely immune. Analysts who previously considered 2025 to be a low-interest rate year will now price in the impact of possible NPLs (non-performing loans) due to consistent fed rates.
In March, President Trump announced further global tariffs on Europe and China, fuelling the concerns of investors. In retaliation, Europe introduced counter tariffs. Emily Bowersock Hill, CEO and founding partner at Bowersock Capital Partners, which has $850M in assets under management, responded in an email to the methodology in calculating the tariffs by the US as:
“So simplistic, and frankly primitive as to leave the market wondering, did its architects ever take Econ 101?”
The US announced tariffs of 54% on Chinese goods, which will take effect on April 9, 2025. China, in response, implemented “reciprocal” tariffs on US goods of 34%, as reported by the country’s official Xinhua News Agency. This led to the US market indexes experiencing the biggest drop since COVID-19, with investors concerned about the impact of these tariffs on the supply chains of companies globally.
The US economy is considered to be entering “continuous stagflation”, which is defined as continued inflation with very low growth and high unemployment. The Cboe Volatility Index (aka VIX) is currently at 29.68%, well above its 1-year average of 17.6%. In such economic conditions, investors should seek stocks which should provide steady/ growing revenue, dividend growth, low cyclicality, and significant cash flows and have a durable competitive advantage. Systemically important sectors are thus ideal for investors, including energy, real estate, healthcare, finance, and tech.
Methodology:
For this list, we analyzed the Tech, Finance, Real Estate, Energy, and Healthcare industries to identify the top stocks for each sector and their historical performance against the market. We then used Insider Monkey’s Q4 2024 proprietary hedge fund holdings database and identified the 12 most popular hedge fund stocks. The stocks are ranked in ascending order of their hedge fund positions.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A professional banker providing consultation to a customer in the security of his office.
Bank of America Corporation (NYSE:BAC)
No. of Hedge Fund Holders: 113
Bank of America Corporation (NYSE:BAC) is a global financial institution offering a wide array of products and services across four segments: Consumer Banking, Global Wealth & Investment Management (GWIM), Global Banking, and Global Markets. It is among the best beginner stocks to invest in.
The banking sector is usually a safe bet for any portfolio. Investors would believe the Fed’s announcement to maintain interest rates at current levels would be beneficial, however, this also leads to reduced consumer spending due to rising inflation, which can negatively impact a bank’s performance. High interest rates can lead to high debt servicing by companies, leading to head-count reduction (aka unemployment). As a result, consumers are unable to make timely payments on their credit card bills, car loans, and mortgages, leading to higher NPLs.
Bank of America Corporation (NYSE:BAC) delivered solid financials for the fourth quarter of 2024, with revenue of $25.35 billion, beating estimates by $220.32 million. Its EPS came in at $0.82, narrowly beating estimates by $0.05. The net income amounted to $6.7 billion. For the full year 2024, the bank’s revenue was $102 billion, its net income of $27 billion, and its EPS came in at $3.21. The bank shared guidance for the upcoming quarter with revenue of $26.93 billion and an EPS of $0.82.
Bank of America Corporation (NYSE:BAC) has managed to weather not only the recent inflationary crisis of 2024 but also COVID-19. The stock has an upside of 50.43%, with a consensus among analysts of the average twelve-month trading price at $51.31.
Overall, BAC ranks 9th on our list of best beginner stocks. While we acknowledge the potential of BAC, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. 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 this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
