Just like that, we are less than two weeks from the end of the first quarter. While it has been a very positive one for investors, the rise in interest rates has brought in much higher volatility and has really pressured technology stocks. The question for many is what direction will the market take as the second quarter unfolds. An even bigger question is can the first-quarter earnings results be as solid as those for the fourth quarter of 2020.
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In a new research report, Savita Subramanian, the superb equity and quantitative strategist at BofA Securities, notes that data received from respondents in the firm’s fifth annual Global Wealth & Investment Management Survey, which was conducted from February 9 to February 23, was the most bullish on stocks in the firm’s survey history. However, many of the firm’s financial advisors were very cautious looking forward over the next 90 days.

With rising interest rates, financials and health care, which are two of the respondents’ favorite sectors, look like a great place to be for the next quarter. We screened the BofA Securities US 1 list of top stocks to buy for those that fall into those two sectors and found five that look like very solid ideas for growth stock investors.

It is still important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

BlackRock

Many on Wall Street love this firm’s near-term growth potential, but also for the long term, and it is a top financial in the US 1 list. BlackRock Inc. (NYSE: BLK) is the largest asset manager in the world, with more than $5 trillion in assets under management. Its acquisitions of Merrill Lynch Investment Management and iShares transformed it from a fixed income manager into a multiproduct and multichannel giant, with roughly 40% of its assets under management overseas. It has leading franchises in exchange-traded funds (ETFs), institutional fixed income, alternatives and cash. It also operates Solutions, a leader in risk analytics.

The company’s strong historical and prospective dividend growth is underpinned by the high-quality and diversified business model. Dividends have increased 18% annually over the past 10 years. Dividend growth likely will moderate but remains solid in the low teens, consistent with expectations for earnings growth in the years ahead.

Shareholders receive a 2.28% dividend. The BofA Securities price objective for the shares is a stunning $867, while the Wall Street consensus price target is $840.57 BlackRock stock closed Thursday at $723.73 a share.

Shares of this top bank have rallied well off the lows and look poised to move higher in the rest of 2021. Citigroup Inc. (NYSE: C) is a leading global diversified financial service company that provides consumers, corporations, governments a broad range of financial products and services.
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Citigroup offers services such as consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management. It operates and does business in more than 160 countries and jurisdictions.

Trading at a still very cheap 10.9 times estimated 2021 earnings, the stock looks very reasonable in what remains a volatile stock market and in a sector that has lagged dramatically until recently.

Citigroup stock investors receive a 2.76% dividend. BofA Securities has a $100 price target, and the consensus price objective is just $79.75. The shares closed trading at $73.84 on Thursday.

Goldman Sachs

This financial services giant is a premier stock for those looking to add financials. Goldman Sachs Group Inc. (NYSE: GS) has a gigantic institutional equity, debt and derivatives business, an ultra-high net worth clientele, top investment banking and capital markets expertise, and the firm continues to be a dominant force around the world in the world of finance.

Its Investment Banking segment provides financial advisory services, including strategic advisory assignments related to mergers and acquisitions, divestitures, corporate defense activities, restructurings and spin-offs; middle-market lending, relationship lending and acquisition financing; as well as transaction banking services.

This segment also offers underwriting services, such as equity underwriting for common and preferred stock and convertible and exchangeable securities, and debt underwriting for various types of debt instruments, including investment-grade and high-yield debt, bank and bridge loans and emerging- and growth-market debt.

Goldman Sachs Global Markets segment is involved in client execution activities for cash and derivative instruments; credit products; mortgages; currencies; commodities; and equities; and provision of equity intermediation and equity financing services. It also offers clearing, settlement and custody services.

Shareholders receive a 1.45% dividend. The $345 price target at BofA Securities is slightly lower than the $346.53 consensus target. Goldman Sachs stock closing above both levels on Thursday at $348 a share.

This medtech giant is a solid pick for investors looking for a safe position in the health care sector, and it is a top pick for 2021. Medtronic PLC (NYSE: MDT) develops, manufactures, distributes and sells device-based medical therapies to hospitals, physicians, clinicians and patients worldwide. It operates in four segments: Cardiac and Vascular Group, Minimally Invasive Therapies Group, Restorative Therapies Group and Diabetes Group.
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The company announced earlier this summer that Blackstone’s life sciences division would invest $337 million into the research and development of its diabetes device technologies. Under the terms of the agreement, Medtronic will receive funding for four diabetes programs over the next several years. Medtronic’s engineering, clinical and regulatory teams will conduct the development work for the programs.

Top analysts noted recently that Medtronic has among the best outlooks for catalysts over the next few months (March to October) of any large-cap, and some see two to four points of multiple expansion and 20% upside in the stock this year.

Investors receive a 1.95% dividend. The BofA Securities team has set a $150 price target. The posted consensus target is $133.75, and Medtronic stock closed on Thursday at $118.83.

Neurocrine Biosciences

This company has partnered with a top big pharmaceutical company and the data has been very solid. Neurocrine Biosciences Inc. (NASDAQ: NBIX) is focused on developing and commercializing therapies for neurological and endocrine disorders.

The company’s lead asset is Ingrezza, approved for the treatment of tardive dyskinesia. Neurocrine Biosciences receives economics on its out-licensed product Orilissa in endometriosis and Oriahnn in uterine fibroids, and it is commercializing Ongentys for Parkinson’s disease. The company is also developing several pipeline programs in congenital adrenal hyperplasia, epilepsy and psychiatric disorders.

Earlier this month the company reported that the Phase 2 INTERACT study of luvadaxistat (NBI-1065844/TAK-831) did not meet its primary endpoint. Secondary endpoints on cognitive performance were met, and the company plans to work with Takeda on next steps. The analysts noted at the time NSS was not central to the thesis on the stock and reiterated a Buy rating

The BofA Securities price target of $128 is in line with the $128.49 consensus target. Thursday’s final print was $89.77 per share.

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These five top stocks are all on the BofA Securities US 1 list of top picks. They all are very prominent in their respective silos in the financial and health care sectors, and all are great second-quarter ideas for growth investors with a little bit of risk tolerance looking to rotate capital.

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