BofA Securities Out With Top 10 Stock Ideas for Q1 2021

Kansas City Southern

This top railroad stock could have a very solid 2021 with an improving economy. Kansas City Southern Inc. (NYSE: KSU) is a Class 1 North American railroad, with a nearly 6,000-track mile network, serving 10 states in the central and south-central United States, as well as Mexico.

With a network spanning across the U.S./Mexico border through Laredo, Texas, the company provides a direct connection between the United States and the industrial centers of Mexico. The company’s Mexican operating subsidiary, Kansas Southern de Mexico, is one of the two largest primary Mexican rail carriers.

The company is expected to generate $500 million in free cash flow for 2020, and analysts expect strong operating leverage potential as volumes start to rebound with an improving economy.

Shareholders receive just a 0.88% dividend. The $228 BofA Securities price objective compares to the $201.16 consensus target. Kansas City Southern stock traded at $202.65 on Monday.

Occidental Petroleum

This energy company made huge news with a Warren Buffett backed purchase of Anadarko Petroleum. Occidental Petroleum Corp. (NYSE: OXY) is an oil-levered multinational organization with principal business segments in oil and gas and in chemicals.

The oil and gas segment explores for, develops, produces and markets crude oil and natural gas, primarily in the U.S. Permian Basin, Colombia, Bolivia, Libya, Oman, Qatar and Yemen. Meanwhile, the chemicals segment manufactures and markets basic chemicals, vinyls and performance chemicals.

The shares have underperformed since the Anadarko acquisition was announced and after the company essentially eliminated the dividend. However, the stock remains a solid idea for investors looking to add energy to portfolios.

BofA Securities has a gigantic $29 price objective, while the consensus price objective is a dramatically lower $16.14. Occidental Petroleum was trading at $18.30 per share.

Raytheon Technologies

This stock is down a stunning 20% from this time last year, and it offers perhaps the best value in the defense and aerospace sector. Raytheon Technologies Corp. (NYSE: RTX) is an industry leader in defense, government electronics, space, information technology and technical services.

With a history of innovation spanning 97 years, Raytheon provides state-of-the-art electronics, mission systems integration, C5I products and services, sensing, effects and mission support for customers in more than 80 countries.

In 2019, United Technologies and Raytheon agreed to merge their businesses to create a new aerospace and defense powerhouse. The two companies received unanimous approval from their respective boards, and the merger is finally complete, with the new company now called Raytheon Technologies.

Shareholders receive a 2.78% dividend. The BofA Securities price objective is $91. The $80.71 consensus target price for Raytheon Technologies stock is also well above the recent share price of $69.25.

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