These stocks are on Bank of America’s US 1 list.
Democrat Joe Biden is the projected winner of the presidential election. However, there was no blue wave in Washington, and Republicans will seemingly maintain control of the Senate. So far, a Biden victory coupled with a split Congress appears to be the ideal outcome for investors. The S&P 500 rallied 5.2% in the five days following Election Day. For investors looking for the best stocks to buy before Biden takes office, here are nine stocks in Bank of America’s US 1 list of top U.S.-listed stocks. Each stock has at least 15% potential upside based on analyst price targets.
Amazon.com (ticker: AMZN)
Not even a global health crisis can slow Amazon’s impressive growth numbers. In the third quarter, Amazon reported 37.3% revenue growth and 196.6% net income growth compared with a year ago. Analyst Justin Post says Amazon’s third-quarter results are the latest demonstration of just how profitable Amazon’s cloud and e-commerce models can be. Given the current social distancing environment, Post says Amazon could gain significant holiday shopping market share this year and exceed margin guidance in the fourth quarter. Bank of America has a “buy” rating and $3,650 price target for AMZN stock.
Arch Capital Group (ACGL)
Arch Capital is an insurance company that specializes in specialty lines. Analyst Joshua Shanker says Arch exceeded his expectations in its property and casualty segments in the third quarter. Insurance written premiums were up 17% on the quarter and reinsurance written premiums were up 38%. Shanker says Arch’s third-quarter mortgage underperformance may simply be a result of the company taking an overly conservative financial approach to the health crisis by increasing reserves despite a net decline in delinquent claims in the quarter. Bank of America has a “buy” rating and $48 price target for ACGL stock.
Activision Blizzard (ATVI)
Activision Blizzard is a leading U.S. video game publisher and owner of popular franchises such as Call of Duty, Overwatch and World of Warcraft. Analyst Ryan Gee says Activision reported strong third-quarter earnings, maintains a bullish outlook for the holiday shopping season and has an impressive slate of content coming in 2021. In fact, Gee says Activision has the most compelling multiyear content outlook of all of the major game publishers. New holiday season console launches could help boost sales in the near term. Bank of America has a “buy” rating and $99 price target for ATVI stock.
Invitation Homes (INVH)
Invitation Homes owns and rents 79,000 single-family homes throughout the U.S. Analyst Jeffrey Spector says Invitation’s third-quarter earnings report suggests single-family rentals are in high demand in a red-hot housing market. Invitation collected 98% of its historical average collection rate in the third quarter. It was also a net buyer of properties in the quarter, acquiring 544 new homes for $175 million and selling 43 homes for $115 million. Spector is bullish on Invitation’s high-quality portfolio and strong management team. Bank of America has a “buy” rating and $37 price target for INVH stock.
Shares of global streaming giant Netflix have been on a tear, gaining about 48% year to date as social distancing measures triggered a boom in subscription growth and engagement. Netflix recently gave its margins a boost by raising the price of its most popular subscription plan by $1 to $14 per month. Netflix also increased the price of a premium tier by $2 to $18 per month. Analyst Nat Schindler says the price hike will boost Netflix’s U.S. average revenue per user from $13.83 to $14.62. Bank of America has a “buy” rating and $670 price target for NFLX stock.
Northrop Grumman Corp. (NOC)
Northrop Grumman is a global pure-play defense contractor. Analyst Ronald Epstein says investors aren’t fully appreciating Northrop’s steady earnings, revenue growth and impressive backlog of projects. Epstein is projecting 4% revenue growth in 2021 and says the company’s positioning in the B-21 bomber and Ground Based Strategic Deterrent programs provide a long-term growth runway for Northrop Grumman regardless of how political power may shift in Washington. Northrop Grumman has a strong balance sheet and a history of dividend growth and buybacks. Bank of America has a “buy” rating and $455 price target for NOC stock.
Qualcomm is a semiconductor supplier for smartphones and other wireless devices, including the Apple (AAPL) iPhone. Analyst Tal Liani says the “stars are aligning” for Qualcomm given the imminent multiyear 5G upgrade cycle. Semiconductor demand and pricing are on the rise globally, and Liani says Qualcomm is a technology leader in the space. Qualcomm generated $1.5 billion in licensing revenue alone in the third quarter, and the company already has licensing agreements in place with all major 5G phone-makers around the world. Bank of America has a “buy” rating and $180 price target for QCOM stock.
Tractor Supply Co. (TSCO)
Tractor Supply is the largest U.S. retailer of farm and ranch equipment. The company recently updated its long-term guidance and is calling for between 8% and 10% annual earnings per share growth over the next three to five years. Analyst Elizabeth Suzuki says that growth guidance is likely conservative given shifts in U.S. population away from urban areas and into suburban and rural regions. In addition, Suzuki says a rise in remote work is bullish, and Tractor Supply should improve margins over time. Bank of America has a “buy” rating and $180 price target for TSCO stock.
Wix.com is an online platform that allows users to create custom websites. Schindler says the health crisis has been a major demand driver for Wix in 2020. More small businesses have been forced online this year, and Schindler says that trend will continue out of necessity in the coming years. In addition, he says Wix has an opportunity to further monetize existing customers via new product offerings. For example, in August the company launched enterprise-level customer support platform Wix Answers. Bank of America has a “buy” rating and $350 price target for WIX stock.
Stocks with upside for a new administration:
— Amazon.com (AMZN)
— Arch Capital Group (ACGL)
— Activision Blizzard (ATVI)
— Invitation Homes (INVH)
— Netflix (NFLX)
— Northrop Grumman Corp. (NOC)
— Qualcomm (QCOM)
— Tractor Supply Co. (TSCO)
— Wix.com (WIX)
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9 American Stocks to Buy Under a New Administration originally appeared on usnews.com