We recently published a list of 11 Best Beginner Stocks To Invest In Now. In this article, we are going to take a look at where Bank of America Corporation (NYSE:BAC) stands against other best beginner stocks to invest in now.
The Downsides to Stocks Rallying Higher
Stocks in the United States are rallying high, but some strategists are eyeing a few risks. On December 5, Max Kettner, Chief Multi-Asset Strategist at HSBC, appeared in an interview on Yahoo Finance to discuss the market outlook heading into 2025. Kettner shared that investors and analysts alike hold extremely bullish expectations of the market in 2025. While that may likely be true, an extremely bullish market may pose a significant risk and have multiple downsides.
He stated that the market will likely see strong upsides on the earnings front, leading to higher yields, which will leave a question on the future of the cutting cycle and whether the Fed will have to commence a rate hike again. He emphasized that higher terminal rates will bring in bond volatility and impact nearly every risk asset in the market.
Speaking of positives, Kettner highlighted that the next few quarters exhibit pretty low growth expectations and earnings expectations for the S&P. He reiterated that with a much lower growth rate, the cutting cycle will be executed as planned. As for inflation, he highlighted the importance of super core inflation, also referred to as underlying inflation. He believes super core inflation is more likely to decline, especially in the first half of the year, adding that he is not as worried about inflation as he was almost three to four months ago.
Kettner stated that the next six to seven months will deliver a supportive market environment for equities in the S&P, especially for global equities. He also believes that the market will see a 12% to 13% upside in the next 12 months until the end of 2025. While Kettner remained inclined to tech stocks, he added that other sectors, such as industrials, will also see a “mini re-acceleration.”
He emphasized that the market rally will go beyond the S&P especially with the current “goldilocks” backdrop, high growth projections, and consensus expectations, benefiting other asset classes. Kettner shared that the ideal portfolio for investors will be tech stocks and a combination of stocks in other sectors, especially industrials and US banks. He added that these sectors are likely to benefit from regulatory changes and the current economic backdrop.
As economic and political turmoil encapsulates the market, some stocks have been performing consistently well over the years, positioned as solid investments, especially for new investors. That said, let’s take a look at the 11 best beginner stocks to invest in now.
Our Methodology
To come up with the 11 best beginner stocks to invest in now, we compiled a list of the top blue chip stocks. We then tracked the hedge fund sentiment of each stock and picked the most popular ones. Our list is in ascending order of the number of hedge fund holders as of Q3 2024, according to Insider Monkey’s database.
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: 98
Bank of America Corporation (NYSE:BAC) is a financial services company that provides investment and wealth management services to individuals, institutions, small to medium-sized businesses, large corporations, and the government. Some of its subsidiaries include Merrill, BofA Securities, and Bank of America Private Bank. As of October 15, Bank of America Corporation (NYSE:BAC) and its subsidiaries together served 69 million consumers in the United States and small business clients. In addition to that, the company had a network of 3,700 financial centers and 15,000 ATMs in the country.
The company has a vast ecosystem which is challenging for competitors to replicate. However, this is not the only thing setting the company apart. Bank of America Corporation (NYSE:BAC) is also accelerating its digital capabilities, with nearly 58 million digital users. As of October 15, the company saw an increase in logins by active customers with a record 400 million transactions on Zelle, a mobile application for digital payments.
In addition to that, Life Plan, a digital platform to help users develop and follow financial goals has been used by almost 16.8 million customers since its inception in 2020. Lastly, the CashPro App, in use by corporate and commercial clients, recorded quarterly payment approvals worth $283 billion, representing a 47% growth rate. Overall, Bank of America Corporation (NYSE:BAC) logged net income worth $6.9 million and revenue worth $25.3 billion, up by $178 million reflecting an increase in investment banking fees and asset management.
Diamond Hill Capital stated the following regarding Bank of America Corporation (NYSE:BAC) in its Q2 2024 investor letter:
“Other top contributors in Q2 included Bank of America Corporation (NYSE:BAC) and Extra Space Storage. Shares of financial services company Bank of America rose in the quarter as it looks increasingly likely net interest income will inflect and begin growing again in 2024’s back half and into 2025.”
Overall, BAC ranks 8th on our list of best beginner stocks to invest in now. While we acknowledge the potential of BAC to grow, our conviction lies in the belief that certain 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.