Investing

BofA Securities Makes Big Summer Changes to US 1 List of Top Stock Picks

With the second quarter of 2021 all but over and the latter half of 2021 right around the corner, many of the top companies we follow on Wall Street are making some changes to their lists of high-conviction stock picks for clients. With the market hitting all-time highs recently on all the major indexes, it makes sense to examine the lists as the rest of the year could have some additional volatility, as the political and geopolitical cycle could still prove to be very explosive components.

The analysts at BofA Securities have made some big changes to the firm’s US 1 list of top stock recommendations. One new stock was added, and four that have performed admirably were removed.

While covering the newest addition, which is of course rated Buy, three of the four that were removed still carry a Buy rating, while one was removed from coverage. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Activision Blizzard Inc. (NASDAQ: ATVI) was removed from the list as coverage of it has been suspended for now. Equinix Inc. (NASDAQ: EQIX), Neurocrine Biosciences Inc. (NASDAQ: NBIX) and Union Pacific Corp. (NYSE: UNP) are also removed, but as we noted, the BofA Securities analysts retained their Buy ratings on all three of these top-performing stocks.

The newest addition to the list is FedEx Corp. (NYSE: FDX), which provides transportation, e-commerce and business services worldwide. The company’s FedEx Express segment offers express transportation, small-package ground delivery and freight transportation services, as well as time-critical transportation services and cross-border e-commerce technology and e-commerce transportation solutions.

Its FedEx Ground segment provides day-certain delivery services to businesses and residences. The FedEx Freight segment offers less-than-truckload freight transportation services. The FedEx Services segment provides sales, marketing, information technology, communications, customer service, technical support, billing and collection and back-office function services.

The company’s Corporate, Other and Eliminations segment offers integrated supply chain management solutions, specialty transportation, customs brokerage and global ocean and air freight forwarding services. It also offers an array of document and business services and retail access to its customers for its package transportation businesses.

The analysts said this when adding the company to the US 1 roster:

Add FDX to US1, a top transport pick. The company trades at 13.6x our fiscal 2022 earnings-per-share estimate, the low end of its range and 5.1x discount to UPS . We see significant tailwinds, led by pricing gains, margin improvement, continued e-COMM growth, and the return of business-to-business volumes . Set fiscal 2022 target for 13%-18% earnings growth. Shares traded down 4%, in a reaction to higher capex, which should support returns.

Investors receive a 1.02% dividend. The BofA Securities price target is at a whopping $372, while the consensus target is just $345.63. Tuesday’s closing print was $297.89 per share.

One outstanding new company joined the US 1 list, while four stocks were retired but remain solid ideas for more aggressive growth stock investors. With FedEx backing up recently, the current entry point is offering good levels to start buying shares on this industry leader.