After the debacle in equity markets last year, the first couple of trading days of the new year offer a chance to try to get back some of the old mojo. Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America, and her team have just released their 11 stock picks for 2023, one in each of the S&P sectors.
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2022 was not exactly a banner year for BofA’s choices. Just four of their 11 picks for the past year outperformed relative to the sector average: BorgWarner, Exxon Mobil, Mondelez and Welltower.
Of the seven stocks that performed worse than the sector average, Eastman Chemical, F5 and NRG Energy were the double-digit underperformers.
The analysts outlined the bases for their 2023 choices:
We select these stocks primarily based on alignment with our 2023 themes … including quality, value, free cash flow generation, domestic vs. global exposure, dividend growth potential, and we looked for companies with earnings resilience given the expected recession – either from top-down strength (e.g., capex/automation beneficiaries) and/or margin stability. We also take into account crowding risk, BofA analysts’ earnings outlook vs. consensus, ESGMeter and other fundamental, statistical and technical factors.
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