Bank of America claims these stocks of “high quality” are expected to provide long-term consistent growth and return. The macro environment has become more favorable for compounding stocks that offer high returns (or ‘Compounders’). BofA’s top down view states that we are close to or at peak bond yields, Eric Lopez, BofA analyst, said in a June 7th research note. At the beginning of this year, the U.S. Treasury 10-year yield was around 1.6%. It now trades at around 3%. In contrast, the German 10-year Bund Yield has risen from -0.18% up to 1.3%. The benchmark German 10-year Bund yield is expected to be 0.75% at the end of the year, according to the bank. The analysts said that, “Supported in part by our view of rates peaking or fading”, the European strategy team has recently become more optimistic about quality stocks. From a risk-reward perspective, they analyzed the returns for 33 “compounder” stock options. They then identified a handful of key names that outperformed the return on invested capital, a measure used by banks to determine how efficient a company’s investment strategies are. ASML, the semiconductor company, and luxury group LVMH are among those “standout” stocks. Assa Abloy, Ashtead, security firm Assa Abloy, as well as Ashtead, a rental company for equipment, is also included. All stocks are buy-rated by BofA. ASML, the Dutch semiconductor supplier is an attractive pick because of its “next generation technology,” which includes ultraviolet. These technologies are used in cloud computing as well as artificial intelligence and 5G. All these trends, according to BofA. BofA stated that French luxury brand LVMH is still one of its highest conviction ideas in the Luxury Goods sector and continues to offer significant upside. It likes the Dior brand and Tiffany jeweler, which it bought in 2021 for $15.8billion. Continue reading Citi names 23 attractive oversold stocks it believes are worth buying right now. Evercore ISI states that the bear market has bottomed and sees value for 23 stocks. Forget Big Tech. BofA likes these under-the-radar tech names — and gives one over 100% upside Assa Abloy, meanwhile, is a buy for its “multi-year track record of consistent growth, profitability and cash generation,” and the bank also likes its pricing power and M & A strategy. The bank also stated that Ashtead, a building-equipment manufacturer, is poised to prosper from its U.S. operations. Analysts stated that Ashtead has the unique opportunity to profit from the US’s rising rental penetration. This is both in terms of its construction exposure, and in its specialty development. We believe that the group will be capable of producing double-digit top line growth over the next few years, despite the possibility of mild US recession. BofA compounder stocks outperformed Stoxx 600 indexes by about eight times since 2007. Analysts said that this was a good time to consider European compounders.
Bank of America San Francisco Branch on January 14, 2021
Bloomberg | Bloomberg | Getty Images
Bank of AmericaAccording to these stocks, they are expected to provide long-term growth and return on investment.
