Investing

BofA Securities Top 10 US Stock Ideas for the Rest of 2021

It is almost hard to believe, in what has been one of the most unbelievable years in recent history, that Halloween is this weekend and Thanksgiving is right around the corner. Overall, the third quarter of 2020 produced the second consecutive quarter of notable market gains. Of the benchmark indexes, the Nasdaq again proved the strongest, climbing more than 11% for the quarter, followed by the large caps of the S&P 500 and the Dow Jones industrial average, which gained 8.5% and 7.6%, respectively.

In a new research report from BofA Securities, they are out with their top ideas for the rest of 2021, and they recapped what was an outstanding third-quarter performance for the group. The report noted this when discussing the extremely strong results:

Our US Top 10 Ideas returned 14.28% in the third quarter and compares to a 5.97% return for the HFRXNA Index; 8.31% of outperformance. For the trailing 12-months the Top US 10 returned 23.51%, while the HFRXNA returned 5.41%, an 18.10% outperformance.

The analysts have eight stocks to buy and two that are expected to underperform. Here we focus on the long ideas, and at first glance, they look like outstanding additions for growth stock investors. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Alphabet

The search giant continues to expand and is even working on a driverless car now. Alphabet Inc. (NASDAQ: GOOGL) is a global technology company focused on key areas such as search, advertising, operating systems and platforms, and enterprise and hardware products. The company generates revenue primarily by delivering online advertising and by selling apps and content on Google Play, as well as hardware products. Alphabet provides its products and services in more than 100 languages and in 190 countries, regions and territories.

The company offers performance and brand advertising services. It operates through Google and Other Bets segments. The Google segment includes principal internet products, such as search, ads, commerce, Maps, YouTube, Apps, Cloud, Android, Chrome and Google Play, as well as technical infrastructure and newer efforts, such as virtual reality.

The analysts point to Google Cloud, which is the largest cloud infrastructure play and engages in more technology, infrastructure research and development in headcount and dollars than any other company. That gives it the strength and wherewithal to compete with and differentiate itself from Amazon’s AWS and Microsoft’s Azure.

The BofA Securities price target for the stock is a stunning $1,850. The Wall Street consensus target is $1,758.61, and Alphabet stock closed Tuesday at $1598.88 a share.

Eli Lilly

This pharmaceutical giant offers solid upside potential and is a great pick for conservative investors. Eli Lilly and Co. (NYSE: LLY) is a global health care company with numerous core products in a number of primary-care pharmaceutical markets. The company generates revenues from its pharmaceutical product and animal health segments.

The product portfolio includes Zyprexa (for schizophrenia and bipolar disorder), Gemzar (pancreatic cancer), Evista (osteoporosis), Cymbalta (depression), Cialis (erectile dysfunction), Strattera (attention deficit hyperactivity disorder), Erbitux (cancer) and Alimta (chemotherapy). Eli Lilly also has a strong presence in the diabetes market.

In July, Eli Lilly raised its full-year profit forecast after increased demand for its Trulicity diabetes drug helped it beat second-quarter profit expectations. The company raised its 2020 adjusted earnings forecast to between $7.20 and $7.40 per share, from its prior range of $6.70 to $6.90 per share.

Shareholders receive a 2.24% dividend. BofA Securities has a $180 price objective, while the consensus target is $165.07. Eli Lilly stock was last seen trading at $131.90.