11 Top Stock Picks for 2022: BofA Global Research

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Bank of America Global Research on Friday released its 11 stock ideas for 2022 — one stock from each of the 11 Global Industry Classification Standard sectors within the BofA-covered S&P 500 universe.

Analysts selected the 11 stocks based on alignment with themes in the firm’s 2022 Year Ahead, which include high-quality, inflation-protected yield, value over growth or free cash flow generators, plus consideration of factors such as fund positioning, BofA analysts’ 2022 earnings outlook vs. consensus and ESGMeter.

Selected stocks are Buy-rated by BofA fundamental analysts. BofA said it also considered its analysts’ views in making its decisions.

The 11 selected stocks have 23% implied upside, on average, to analysts’ price objectives (as of Dec. 16, 2021), plus an average dividend yield of 2.2% (vs. 1.7% for the 11 sectors on average), according to BofA.

BofA said these stocks are mostly neglected by active funds. They benefit more from inflation, higher GDP, higher interest rates, higher oil prices and wage growth than an equal-weighted 11 sector portfolio — all of which BofA expects will occur in 2022.

Here are BofA’s 11 stock picks for 2022:

1. Walt Disney Co. (DIS)

Sector: Communication services
BofA US Equity & Quant Strategy Comments: Reopening exposure (parks/cruise/movies). Neglected by funds (rel. weight 0.54x). High Quality.
Closing price as of 12/16/21: $148.74

(Image: AP Photo/Richard Drew, File)

2. BorgWarner Inc. (BWA)

Sector: Consumer discretionary
BofA US Equity & Quant Strategy Comments: Inflation beneficiary, capex beneficiary, neglected (0.54x). High Quality, strong FCF yield (8%).
Closing price as of 12/16/21: $44.22

(Photographer: Mauricio Palos/Bloomberg)

3. Mondelez International (MDLZ)

Sector: Consumer staples
BofA US Equity & Quant Strategy Comments: High Quality. High ESGMeter. Slightly underweight (0.95x). Positive GDP and interest rate betas.
Closing price as of 12/16/21: $65.69

(Dirk Van De Put, Chairman and CEO of Mondelez International, Photographer: Kyle Grillot/Bloomberg)

4. Exxon Mobil Corp. (XOM)

Sector: Energy
BofA US Equity & Quant Strategy Comments: Neglected (0.27x). Higher oil beta than CVX. Strong 10% FCF yield (2022 consensus). High ESGMeter level.
Closing price as of 12/16/21: $61.37

(Image: Bloomberg)

5. Wells Fargo & Co. (WFC)

Sector: Financials
BofA US Equity & Quant Strategy Comments: High Quality. Value. Positive inflation, GDP, interest rate betas. High ESGMeter level. Likely benefits more from higher rates than other banks.
Closing price as of 12/16/21: $50.24

(Image: Bloomberg)

6. CVS Health Corp. (CVS)

Sector: Health care
BofA US Equity & Quant Strategy Comments: High Quality. Value, medium duration, domestic. High ESGMeter level.
Closing price as of 12/16/21: $101.22

Photo: David Paul Morris/Bloomberg)

7. Eaton Corp. PLC (ETN)

Sector: Industrials
BofA US Equity & Quant Strategy Comments: Positive inflation/GDP/oil betas. Capex/reshoring beneficiary. High Quality. High ESGMeter level. Neglected (0.81x).
Closing price as of 12/16/21: $168.80

(Image: Shutterstock)

8. F5 Inc. (FFIV)

Sector: Information technology
BofA US Equity & Quant Strategy Comments: Neglected (0.60x). High Quality. Positive betas vs. inflation, GDP, interest rates. High ESGMeter level.
Closing price as of 12/16/21: $233.93

(Photographer: Chona Kasinger/Bloomberg)

9. Eastman Chemical Co. (EMN)

Sector: Materials
BofA US Equity & Quant Strategy Comments: Neglected (0.89x). High Quality. Attractive dividend yield (2.6%). High ESGMeter level.
Closing price as of 12/16/21: $120.09

(Mark Costa, Chairman and CEO of Eastman Chemical, Photo: courtesy of Eastman Chemical)

10. Welltower Inc. (WELL)

Sector: Real estate
BofA US Equity & Quant Strategy Comments: Neglected (0.22x). High Quality. Attractive dividend yield (2.9%). High ESGMeter level.
Closing price as of 12/16/21: $83.08

(Image: Shutterstock)

11. NRG Energy Inc. (NRG)

Sector: Utilities
BofA US Equity & Quant Strategy Comments: Positive inflation/GDP betas. Screens well on Alpha Surprise and DDM Alpha models. Neglected (0.60x). Attractive dividend yield (3.3%).
Closing price as of 12/16/21: $39.85

(Image: Adobe Stock)