Buy these stocks heading into November.
The S&P 500 limped into November on a low note as investors grow increasingly concerned about the contentious U.S. election, the ongoing global health crisis and a lack of economic stimulus from Washington. However, despite the near-term concerns, third-quarter earnings season has been better than expected so far, and analysts believe the recent market dip has created buying opportunities for long-term investors. For investors willing to ride out the volatility, Bank of America recently upgraded a handful of stocks to buy on the dip. Here are Bank of America’s nine most recently upgraded stocks to buy in November.
Kontoor Brands (ticker: KTB)
Kontoor Brands is an apparel company and the owner of the Wrangler and Lee brands. Analyst Heather Balsky upgraded Kontoor and says the stock has multiple near-term bullish catalysts ahead. Balsky says Wall Street is underestimating Kontoor’s sales trajectory, which should get a big boost from new distribution in the fourth quarter. For example, the Lee brand will be distributed at 2,000 Walmart (WMT) locations. Balsky says Kontoor will also likely benefit from the next round of economic stimulus to lower-income Americans. Bank of America has a “buy” rating and $38 price target for KTB stock.
Range Resources Corp. (RRC)
Range Resources is a natural gas producer that operates primarily in Appalachia and Louisiana. It’s been a brutal year for the energy sector, but analyst Doug Leggate recently upgraded Range Resources. Leggate says growth in U.S. oil production has stalled, and associated gas production growth has stalled along with it. As a result, Leggate says the potential for a sustainable recovery in natural gas prices is back on the table. He says Range is undervalued given his current outlook for gas prices. Bank of America has a “buy” rating and $14 price target for RRC stock.
Reliance Steel & Aluminum Co. (RS)
Reliance Steel & Aluminum is the largest North American metals service center. Analyst Timna Tanners upgraded Reliance and says the company is a defensive long-term investment in an uncertain environment. The company’s recent earnings numbers beat expectations, and Tanners says Reliance has an extremely healthy balance sheet relative to other companies in the metals space. Tanners says the company’s low leverage suggests a potential acquisition could be on management’s radar. In addition, Reliance’s diversified end markets help insulate the company from a weak nonresidential construction market. Bank of America has a “buy” rating and $123 price target for RS stock.
Pinterest is one of the most popular social media platforms and has more than 400 million monthly active users. Analyst Justin Post upgraded Pinterest and says online advertising is bouncing back in the second half of 2020. Pinterest mobile app downloads were up 76% in the second quarter and 68% in the third quarter, highlighting the tremendous growth of the platform. At the same time, Post says Pinterest’s ad innovation, such as automated bidding, is helping the company monetize its growing user base and increase its average revenue per user. Bank of America has a “buy” rating and $58 price target for PINS stock.
NiSource is a U.S. utility company with roughly 3.5 million natural gas customers and 500,000 electricity customers. Analyst Julien Dumoulin-Smith upgraded NiSource and says the stock is a unique gas utility investment with both acquisition growth opportunities and renewable energy exposure. Dumoulin-Smith says NiSource has a track record of making favorable asset divestments, including the spinoff of its pipeline business in 2015. Dumoulin-Smith says the company’s transition to a more renewable business also puts it on the radar of environmentally conscious investors and funds. Bank of America has a “buy” rating and $26 price target for NI stock.
Oshkosh Corp. (OSK)
Oshkosh is a leading producer of specialty vehicles and derives nearly half of its revenue from its access equipment segment. Analyst Ross Gilardi upgraded Oshkosh and says the company is a high-quality, defensive investment that has been held back by its defense business in recent quarters. Gilardi’s fiscal 2021 earnings estimates are about 6% more than consensus Wall Street projections. Gilardi is expecting equipment rental capital expenditures to be depressed in 2021, but he says it’s unlikely spending will drop much lower than its current level. Bank of America has a “buy” rating and $97 price target for OSK stock.
BWX Technologies (BWXT)
BWX Technologies supplies naval nuclear reactors to U.S. submarines and carriers. Analyst Ronald Epstein upgraded BWXT and says the stock is a pure-play winner of the U.S. Department of Defense’s Indo-Pacific strategy, which has bipartisan support from Congress. Increasing U.S. trade tensions with China have made the Pacific region an increasingly important area for investment. Epstein says BWXT has a defensive, stable business with long-term cash flow visibility. He says BWXT is undervalued given its exposure to the U.S. Navy and its nuclear-powered ship monopoly. Bank of America has a “buy” rating and $70 price target for BWXT stock.
Sonos produces multiroom wireless audio systems and smart speakers. Analyst John Babcock upgraded Sonos and says the company is experiencing encouraging demand trends. Babcock says Sonos is a well-managed company that is positioned to beat its fourth-quarter growth guidance. Retail store closures, inventory rebalancing and supply chain issues weighed on Sonos’ revenue in the first half of 2020. However, Babcock says home-related consumer electronics have performed relatively well. He says the Sonos sell-off after Apple (AAPL) removed third-party speakers from its website created a buying opportunity. Bank of America has a “buy” rating and $18 price target for SONO stock.
Foot Locker (FL)
The retail sector has been a perilous space in 2020. Shares of athletic footwear and apparel retailer Foot Locker were down more than 50% at one point this year. However, they have since recovered nearly all of those losses on the strength of better-than-expected earnings and same-store sales growth. Analyst Robert Ohmes upgraded Foot Locker and says the company’s exposure to the upcoming Nike (NKE) product cycle puts the company in an excellent spot heading into the critical holiday shopping season. Bank of America has a “buy” rating and $50 price target for FL stock.
Upgraded stocks for this month:
— Kontoor Brands (KTB)
— Range Resources Corp. (RRC)
— Reliance Steel & Aluminum Co. (RS)
— Pinterest (PINS)
— NiSource (NI)
— Oshkosh Corp. (OSK)
— BWX Technologies (BWXT)
— Sonos (SONO)
— Foot Locker (FL)
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