As incredible as it may seem, 2021 is already here, the holidays are over and everybody finally has returned to Wall Street for what could be a very different year for investors, compared with the roller-coaster ride we took last year. Interest rates are expected to stay at generational lows, and with more stimulus headed out from Washington, D.C., that may help backstop struggling U.S. businesses and consumers.
A new BofA Securities research report is among the first out with top ideas for the first quarter of 2021. They 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 stock picks for growth accounts.
Note that the two stocks the analysts rate as Underperform are Hexcel Corp. (NYSE: HXL) and Iron Mountain Inc. (NYSE: IRM). More aggressive investors may want to consider these ideas as possible short sale candidates for the first quarter.
Citigroup
This top bank has had a nice run off the 2020 lows but still has plenty of upside, and it is on the BofA Securities US 1 list. Citigroup Inc. (NYSE: C) has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. It provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management.
Trading at a still very cheap 9.9 times estimated 2021 earnings, Citigroup stock looks very reasonable in what remains a volatile market and in a sector that has lagged dramatically over the past year.
Citigroup investors receive a sizable 3.39% dividend. BofA Securities has a $79 price target on the shares. The Wall Street consensus price objective is $69.98. Citigroup stock traded at $60.70 Tuesday morning.
Foot Locker
This athletic shoe retailer has rallied from lows and looks ready to move higher. Foot Locker Inc. (NYSE: FL) is an athletic footwear and apparel retailer in North America, Europe and Asia. The company’s banners include Foot Locker, Champs Sports, FootAction, Kids Foot Locker, Lady Foot Locker, SIX:02 and Eastbay.
Many Wall Street analysts feel that consumers are bearing price increases from the top companies like Nike, Reebok and Adidas. They also say that currently athletic apparel and footwear companies are continuing to see higher gross margins and return on invested capital, which some think will be a source of multiple expansion.
Foot Locker stock investors receive a 1.53% dividend. The BofA Securities price target is $55, and the consensus price target is lower at $42.95 The shares traded early Monday at $39.80.
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