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- Markets are experiencing turbulence with interest rate and inflation uncertainty driving up volatility.
- Investors should focus on stocks with potential for long-term growth, according to Bank of America.
- The bank listed 23 stocks to add to your portfolio if you’re looking for long-term returns.
It’s been a wild year for stocks.
High inflation and uncertainty over the Federal Reserve’s hiking schedule have injected a significant amount ofinto markets.
The VIX, an index which measures the volatility level of the S&P 500, has surged and is up 72.4% year-to-date. Meanwhile, investors have rotated away from riskier assets like tech stocks and bitcoin, pivoting to safe havens like gold and 10-year Treasury notes.
But that shouldn’t discourage retail investors from adding stocks that are well-positioned for the long-term to their portfolios, according to Bank of America. The bank’s thematic investing department recently published a list of equities with exposure to demographic-based, long-term trends.
Thematic investors focus on trends that drive growth, rather than specific companies or sectors. Several analysts have argued that growth stocks are now available at a significant discount.
“According to our valuations, the growth category is now the most undervalued,” Morningstar‘s Dave Sekera said earlier this month. “Now is not the time to be reducing exposures but to be adding judiciously—especially in high-quality companies.”
Here are the 23 US-listed stocks that Bank of America says will benefit from long-term trends:
Market cap: $2.61 billion
Analysis: “Progyny is a provider of fertility benefits to large, self-insured employers,” research analyst Michael Cherny said. “Progyny helps patients navigate a complex and stressful division of women’s health and has demonstrated superior outcomes to other models.”
2. JPMorgan Chase
Market cap: $351.49 billion
Analysis: “The bank is very well positioned to benefit from changing demographics, be it catering to changing customer preferences as they increasingly consume banking services digitally, to benefitting from the generational transfer in wealth over the coming years,” analyst Ebrahim Poonawala said.
Market cap: $53.30 billion
Analysis: “UBS is the largest international wealth manager,” analyst Alastair Ryan said.”The group is also a major asset manager, the largest Swiss retail and commercial bank and has rebuilt its investment bank to steady profitability.”
“Management has laid out an ambition to align its investment banking activities with wealth, evidence of which we believe would be welcomed by investors,” Ryan added.
4. AMN Healthcare
Market cap: $4.49 billion
Analysis: “AMN is the largest provider of healthcare staffing services in the country, supplying hospitals and other health care providers with the professionals they need to care for patients-on both a LT and contingent basis,” Bank of America’s Kevin Fischbeck said. “In addition to the core recruiting and staffing business, AMN offers scheduling, consulting, and other workforce management and tech services.”
Industry: healthcare, real estate
Market cap: $37.30 billion
Analysis: “Welltower is a fully integrated and self-administeredinvested across the full spectrum of health care real estate,” Joshua Shanker and Jeffrey Spector said. “Welltower has ownership interests in nearly 1,400 facilities in high-growth markets in the US, the UK, and Canada.”
6. Grab Holdings
Market cap: $10.42 billion
Analysis: “Grab is Southeast Asia’s leading superapp operating primarily across the deliveries, mobility, and digital financial services sectors across eight countries in the region,” Sachin Salgaonkar said. “In its core categories of mobility & delivery, Grab is the market leader in the region with 71% market share in mobility and a 50% market share in delivery.”
Industry: gaming, e-commerce
Market cap: $42.84 billion
Analysis: “Sea recently expanded its e-commerce business into Brazil and Mexico, while its first self-developed game ‘Free Fire’ has a global user base,” Salgaonkar said. “Sea also runs a digital payments platform supporting the two businesses.”
8. Bank of Montreal
Market cap: $66.66 billion
Analysis: “As the bank most levered to commercial lending in Canada, we view BMO as well positioned to benefit from strong economic activity and increased demand driven by immigration,” Poonawala said.
Industry: real estate
Market cap: $14.27 billion
Analysis: “UDR is a strong operator with diverse exposure to urban and suburban,” three analysts said. “[It also] offers a strong affordability appeal.”
10. The Home Depot
Market cap: $297.58 billion
Analysis: “Superior strategy and execution have underpinned Home Depot’s market share gains over the last decade, and we believe Home Depot will continue to outperform the overall renovation category, which has favorable tailwinds for the near and long term,” Bank of America’s Elizabeth L Suzuki said.
11. D.R. Horton
Industry: real estate
Market cap: $24.81 billion
Analysis: “Approximately 75% of revenue is derived from the Southeast, South Central and West regions,” Rafe Jadrosich said. “The company also provides mortgage financing and title agency services to homebuyers.”
12. ASGN Incorporated
Market cap: $4.57 billion
Analysis: “The current nature of the IT labor market benefits ASGN’s business model,” Bank of America’s Heather Balsky said. “There’s a large contingent workforce because tech workers favor moving between interesting assignments, while employers prefer to hire shorter-term specialized workers for specific projects.”
Market cap: $1.40 billion
Analysis: “Fiverr has a unique marketplace for business services and we believe the change towards permanent remote work and the Great Resignation will likely increase the long term demand for supply of freelancers,” the bank said.
Market cap: $2.34 billion
Analysis: “Upwork is still in the early innings of their expansion opportunity and is well positioned to benefit from an increasing worker demand for a flexible/remote working model post-pandemic,” a team of Bank of America analysts said.
Market cap: $17.91 billion
Analysis: “Hologic is a global provider of medical imaging, surgical, and diagnostic products that focus on women’s health issues,” analyst Derik de Bruin said. “The lion’s share of Hologic’s sales can be attributed to improving women’s health in some fashion.”
Market cap: $9.00 billion
Analysis: “Women’s health is a core component of Organon’s mission statement,” Bank of America said. “This commitment to centering the company’s mission on women’s health applies not only to its product portfolio but also its corporate governance.”
17. Victoria’s Secret
Market cap: $2.96 billion
Analysis: “We think the brand turnaround is working and that new bra and product launches will build sales volume through 2022,” Lorraine Hutchinson and Alice Xiao said. “The stock is an attractive opportunity given its myriad growth drivers and its many initiatives to maximize relevancy for the next generation of consumers.”
Market cap: $0.54 billion
Analysis: “We view Torrid as an industry disruptor in the plus-size apparel space with a niche on fit and a steady growth trajectory,” Hutchinson and Xiao said.
Market cap: $16.48 billion
Analysis: “As ‘Gen C‘ grows into its teenage years, we think they could view Roblox as a multi-purpose platform, similar to how social networks were viewed before they grew beyond their core university student demographic,” Bank of America’s Omar Dessouky said.
Market cap: $13.05 billion
Analysis: “Buyers and sellers of crypto and other digital assets tend to skew towards a younger generation, who is typically more tech-savvy and more willing to try new technologies than older cohorts,” Jason Kupferberg said. “The next generation will have an expectation for a digital lifestyle, including as it relates to their money and investments.”
Market cap: $41.76 billion
Analysis: “Gen C will have an expectation for a digital lifestyle, including as it relates to their money and investments,” Kupferberg said. “Among its various financial service offerings,users can buy and sell bitcoin through the platform.”
Market cap: $2.24 billion
Analysis: “Trupanion is a premierprovider offering health insurance for cats and dogs,” the bank said. “Trupanion is the industry leader within North America, representing a market share of around 18%.”
23. Walt Disney Company
Market cap: $181.24 billion
Analysis: “Disney retains best-in-class assets, a strong global brand and should continue to see an earnings recovery driven by pent-up demand in theme parks,” research analysts Jessica Reif Ehrlich and Brent Navon said.
Get the latest Bank of America stock price here.