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5 BofA Securities Large-Cap Defensive Portfolio Stocks to Buy Before Earnings
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After a massive run since March of 2020, stocks are starting to look a little tired, even though most across Wall Street expect earnings for this quarter and the rest of the year to be very good. Many strategists and economists also expect the gross domestic product numbers for 2021 to come in as high as 7%. While the most recent AAII investor sentiment readings show bullishness, it makes sense to start to consider some portfolio caution as May approaches.
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BofA Securities made some recent changes to its Large Cap Defensive portfolio, so we decided to screen the stocks, looking for those that make sense for the rest of 2021. The following five look like good ideas in front of earnings reports and for the reopening theme.
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.
Comcast
This top media and entertainment company remains a Wall Street favorite, and it is on the BofA Securities US 1 list. Comcast Corp. (NASDAQ: CMCSA) is the largest U.S. provider of cable services, with over 22 million basic and nearly 27 million broadband subscribers. Through its acquisition of Sky, Comcast now has direct customer relationships with 53 million subscribers has a foothold in the European market in addition to its U.S. operations.
Comcast owns NBCU (including the NBC TV networks, Telemundo, MSNBC, USA, SyFy, Bravo, E!, CNBC), Universal Films and Universal Theme Parks. The company has invested in technology to build an advanced network that delivers among the fastest broadband speeds, and it brings customers personalized video, communications and home management offerings.
Shareholders receive a 1.85% dividend. The BofA Securities price target for the shares is $65, while the Wall Street consensus target is $61.12. Comcast stock closed trading on Friday at $55.11 a share.
Costco
This has become the ultimate destination for the American consumer regardless of the economy. Costco Wholesale Corp. (NASDAQ: COST) has a unique business model. It operates membership warehouses and it buys the majority of its merchandise directly from manufacturers, essentially cutting out the middleman. Costco sells in bulk but also at a lower price, thus fueling its rapid growth. With consumers having more free cash to spend as gasoline prices have dropped, this major retailer may continue to see large revenue gains.
Costco remains one of the few conventional retailers where metrics like store traffic, market share gains and a validated model could bode well for international growth and expansion. The company is largely unharmed by e-commerce, and it continues to add stores in strategically mapped out locations.
Wall Street loves the company’s pricing authority on key items and the leading merchandising offerings, and the relatively new Costco co-branded card with Visa is a real positive. Add in the company’s growing online presence and the future looks bright.
Shareholders receive a 0.85% dividend. BofA Securities has a $415 price target, and the consensus target is $387.50. Costco stock closed at $370.72 on Friday.
24/7 Wall St.Extra Space Storage
This top real estate investment trust (REIT) has very solid upside potential for investors and is on the Jefferies Franchise List of top stock picks. Extra Space Storage Inc. (NYSE: EXR) is a fully integrated, self-administered and self-managed REIT headquartered in Salt Lake City, Utah. Like many self-storage companies, Extra Space offers rentable storage space offering customers conveniently located and secure storage units across the country, including boat storage, recreational vehicle storage and business storage.
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As of the fourth quarter of 2020, the company owned or operated 1,971 self-storage stores in 40 states, the District of Columbia and Puerto Rico. The portfolio consists of approximately 149.2 million square feet of rentable space and 1.4 million units, making the company the second-largest owner/operator of self-storage stores and the largest self-storage management company in the country.
Unitholders receive a 2.80% distribution. The $152 BofA Securities price target is well above the consensus target of $140.33. Extra Space Storage stock closed at $142.61 a share.
NextEra Energy
With a very strong balance sheet, this company looks poised for a solid finish to the rest of 2021. NextEra Energy Inc. (NYSE: NEE) consists of two main business segments: the Florida Power & Light (FPL) regulated utility, and NextEra Energy Resources, a deregulated generator of predominantly wind, natural gas, nuclear and solar powered assets in North America. The company also holds a 65.1% share in the yieldco NextEra Energy Partners.
FPL announced last summer a groundbreaking “30-by-30” plan to install more than 30 million solar panels by 2030 and make the state of Florida a world leader in the production of solar energy. It and NextEra Energy Resources are already the world’s largest producers of renewable energy from the wind and sun. When this plan is completed, FPL expects to be the largest utility owner and operator of solar in America.
Investors receive a 1.90% dividend. BofA Securities has set a $93 price objective. The consensus figure is $87.50, and NextEra Energy stock closed at $80.94 on Friday.
Visa
This top credit card issuer is becoming a huge leader in digital pay. Visa Inc. (NYSE: V) operates the world’s largest retail electronic payments network. The company provides processing services and payment product platforms, including consumer credit, debit, prepaid and commercial payments, that are offered under Visa and related brands.
According to Nielsen estimates, the company is the largest global credit network (as measured by volume) and the second-largest global debit network. Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa’s innovations, however, enable financial institution customers to offer consumers more choices: pay now with debit, pay ahead of time with prepaid or pay later with credit products.
Shareholders receive a 0.57% dividend. BofA Securities has a $234 price target. The consensus target is $244.90, and Visa stock ended the week at $226.41.
These five stocks make sense for investors looking to stay in the game but concerned about the lofty multiples across the stock market. These companies should benefit from economic growth through 2021, but they offer a better risk profile than expensive, high-flying momentum stocks.
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