With earnings for the second quarter on deck, and the third quarter of 2020 officially underway, many of the top companies we follow on Wall Street are making some changes to the lists of their high-conviction stock picks for clients. The market still showing volatility not seen in years, so it makes sense to examine the lists and make some changes, as the rest of the year could be even more volatile, as the political and geopolitical cycle could prove to be very explosive components.
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In a dramatic move, the likes of which we have rarely seen, the research team at BofA Securities has made huge across the board changes to the firm’s US 1 list of top stocks to buy. Four companies were removed and a stunning 14 new companies are added. The analysts also made changes to the weighting methodology and the committee process for the US 1 list.
The team noted this in the report:
Going forward, the list will be weighted based on market capitalization, and will allocate 2% for stocks with <$100 billion market cap, 4% for stocks with $100-$400 billion market cap, and 6% for any stocks with greater than $400 billion market cap. To the extent that any security selection causes the list allocation to exceed or fall short of 100%, this excess/shortfall will be allocated equally across all stocks in the list.
Many of the stock added to the list are Wall Street favorites, so we screened the new additions for those that should fare well in the second half of 2020. We also looked for stocks that can hold up if we trade lower, as the huge “melt-up” rally of the March lows may see some consolidation. It’s important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Here are five of the new additions to the BofA Securities US 1 list. All are rated Buy.
Activision Blizzard
This remains a top gaming pick on Wall Street. Activision Blizzard Inc. (NASDAQ: ATVI) develops and publishes online, personal computer (PC), video game console, handheld, mobile and tablet games worldwide.
The company develops and publishes interactive entertainment software products through retail channels or digital downloads and downloadable content to a range of gamers. Its legacy franchise Call of Duty game continues to be hugely popular.
The analysts are also positive on the shares because of the upcoming title “Crash Bandicoot 4: It’s About Time” and another smaller game. Given the continued pandemic issues, gaming stocks remain a solid idea for the second half. In addition, Activision’s coming slate of games, including “Overwatch 2” and “Diablo 4,” positions the game maker to take advantage of the new consoles from Sony and Microsoft.
Investors receive just a 0.55% dividend. BofA Securities has an $80 price objective on the shares, while the Wall Street consensus target price is $79.06. Activision Blizzard stock was trading early Wednesday at $76.50.
Charter Communications
This top cable giant has been expanding services and product offerings for clients. Charter Communications Inc. (NASDAQ: CHTR) is a leading broadband communications company and the second-largest cable operator in the United States. It provides a full range of advanced broadband services, including Spectrum TV video entertainment programming, Spectrum Internet access and Spectrum Voice.
Spectrum Business similarly provides scalable, tailored and cost-effective broadband communications solutions to business organizations, such as business-to-business internet access, data networking, business telephone, video and music entertainment services and wireless backhaul.
The company made a huge investment in Time Warner Cable, and Charter is tracking well on its integration, which will enable all of its product offerings, pricing, packaging and service operations to be universal across its footprint.
The BofA Securities price objective is $590, and the lower consensus target is $566.97. Charter Communications stock traded early Wednesday at $519.70.
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