With the market very rich, and the COVID-19 pandemic still a long way from being over, we decided to sift through the companies that have been absolutely eviscerated as a result of the demolition of the economy and everything related, like travel, lodging, discretionary purchasing, gaming and more.

It makes sense that truly great companies that have been hit almost exclusively because of the pandemic can rebound when we begin to return to normal, let alone to the kind of economy that was chugging along quite nicely before all this started.

We screened the BofA Securities research database and found five companies that offer outstanding upside potential for growth investors who can be patient, looking to next year and even beyond. All are rated Buy at BofA Securities, but it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Apache

This company was long considered an industry leader but its stock has been battered. Apache Corp. (NYSE: APA) is an independent energy company that explores for, develops and produces natural gas, crude oil and natural gas liquids (NGLs). The company has operations in onshore assets located in the Permian and Midcontinent/Gulf Coast onshore regions, and offshore assets situated in the Gulf of Mexico region. It also holds onshore assets in Egypt’s Western desert and offshore assets in the North Sea region, including the United Kingdom.

Apache also has an offshore exploration program in Suriname. As of December 31, 2019, it had total estimated proved reserves of 551 million barrels of crude oil, 186 million barrels of NGLs, and 1.6 trillion cubic feet of natural gas. The company remains an acquirer/exploiter/explorer and a fiscally conservative company that has grown its reserves and production consistently via acquisitions and organic projects.

Apache posted a solid second quarter, and the analysts said this:

A solid second quarter sees costs and capex trending down and implies a second half of 2020 cash break-even at $30 a barrel with free cash at the current strip. But overshadowing the quarter was an announced 3rd exploration success at Kwaskwasi further linking Apache’s story to Suriname. Resource scale suggests that story is just getting started but with Suriname still poorly reflected in the company’s share price.

Holders of Apache stock receive just a 0.65% dividend. BofA Securities has a gigantic $26 price target, and the Wall Street consensus target is $17.00. Shares closed trading on Tuesday at $14.65 apiece.

Citigroup

Shares of this top bank have been trading at the lowest levels since 2016. 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 7.2 times estimated 2020 earnings, this company looks very reasonable in what remains a volatile stock market and in a sector that has dramatically lagged.

Investors receive a 4.00% dividend. The BofA Securities price target is $74, while the posted consensus target is $69.71. Citigroup stock closed at $51.65 on Tuesday.

Darden Restaurants

With phase two opening procedures in place in some areas, the restaurant industry is close to leaving the horror of being shut down except for carryout and delivery. Darden Restaurants Inc. (NYSE: DRI) owns and operates full-service restaurants in the United States and Canada.

As of November 24, 2019, Darden owned and operated approximately 1,799 restaurants, which included 867 under the Olive Garden, 518 under the LongHorn Steakhouse, 166 under the Cheddar’s Scratch Kitchen, 79 under the Yard House, 59 under The Capital Grille, 45 under the Seasons 52, 42 under the Bahama Breeze and 23 under the Eddie V’s Prime Seafood brands.

The company reinforced its balance sheet by completing a $460 million equity raise ($400 million common, $60 million greenshoe). That highlights Darden’s growing cost of capital advantage to peers, given years of a more conservatively run balance sheet. Despite the 6% dilution, Wall Street thinks Darden’s war chest will help it muscle out peers after the pandemic.

The dividend has been suspended now. The $85 BofA Securities price target is less than the $86.11 consensus target. The last Darden Restaurants stock trade on Tuesday hit the tape at $82.61.

Marriott International

Without a doubt, travel and lodging returning to normal levels will be big for this lodging giant. Marriott International Inc. (NYSE: MAR) is a global lodging company with over 6,200 properties and 1.2 million rooms in its system. The company has 30 brands in the limited-service (including Courtyard, Residence Inn, TownePlace Suites, Fairfield Inn, SpringHill Suites) and full-service (Marriott, Ritz-Carlton, Renaissance, Bulgari, W Hotels, St. Regis) segments.

The company has continued to integrate the Starwood acquisition of 2015 and derives benefit from its increased scale and brand portfolio of 1.4 million rooms, compared with approximately 1 million for its competitors.

BofA Securities has set a $102 target price. The consensus target is $98.90, and Marriott stock closed most recently at $98.77.

Southwest Airlines

This company continues to expand routes, remains a low-cost leader and is one of the top airline picks across Wall Street. Southwest Airlines Inc. (NYSE: LUV) operates a passenger airline that provides scheduled air transportation services in the United States and near-international markets. It was one of the airlines with the fewest delays last year.

As of December 31, 2019, the company operated a total of 747 Boeing 737 aircraft, and it served 101 destinations in 40 states, the District of Columbia and the Commonwealth of Puerto Rico, as well as 10 near-international countries, including Mexico, Jamaica, the Bahamas, Aruba, the Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos.

Southwest recently had a massive stock sale to raise cash and improve the balance sheet. The analysts noted this:

Southwest Airlines completed a $3.9 billion capital raise which brings total liquidity to $14.8 billion after all the government payroll support funds. At a cash burn of $34 million per day, the company has enough liquidity to get through the next 435 days (vs 320 days for Delta / 225 days for United). Even with a slow recovery, we expect Southwest to end 2020 with $10 billion in cash and $1.5 billion in net debt.

The dividend has been suspended until September 2021. BofA Securities just raised its $38 price target to $44. The consensus target down at $39.63, and Southwest Airlines stock closed at $37.06 a share.

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Shares of these five top companies are trading miles below their all-time highs, and they offer patient growth investors incredible opportunities. It is also important to remember that short sellers have leaned on all these stocks, and they will be forced to close those trades when things start to improve.

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