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Key takeaways
- Bank of America analysts have compiled a group of 16 stock picks for investors looking to find value outside of AI trading amid growing concerns about a bubble.
- The list includes AT&T, Disney, Dollar General, KeyCorp, Progressive and cruise operator Viking.
If you’re looking to diversify your portfolio beyond AI, Bank of America has some suggestions.
In a note to clients this week, analysts listed 16 stock picks that are not generally considered direct beneficiaries of AI and that they believe could be undervalued, leaving room for growth. The analysts said their ideas are not included in AI-related exchange-traded funds; Their earnings estimates have been raised in the last three months; They trade under the broader market multiple, and are trading at least 10% below their 52-week highs.
Here are some of their thoughts.
Why is this important to investors?
Technology stocks have fallen in recent weeks, as investors rotate into stocks with less exposure to artificial intelligence trading, amid concerns about soaring valuations after a surge earlier this year that helped push major U.S. indexes to record levels.
Consumer focused, well known names
Some are companies likely familiar to US consumers, including telecom giant AT&T (T), The Walt Disney Company (DIS), Dollar General (DG), and cruise operator Viking Holdings (VIK).
Analysts said Disney, which reported its fourth-quarter financial results on Thursday, may be poised for growth from its sports attractions and experiences segment, which includes theme parks. AT&T could have several growth levers, they wrote, after the company beat phone subscriber estimates in its most recent report.
Viking’s “diverse, comprehensive, destination-focused product continues to differentiate it from peers, resulting in superior financial performance,” they said. Meanwhile, the general dollar is expected to see an improvement in its performance as consumers under inflation pressures and looking for value “trade up,” according to Bank of America.
Bank of America’s list also included Church & Dwight (CHD), maker of household brands such as Arm & Hammer and Oxi-Clean, and seasoning and packaged food maker McCormick & Co. (MKC), and shopping mall operator Regency Centers Corp (REG).
Financial and logistics stocks
Several finance and logistics companies, such as KeyCorp (KEY) and insurance giant Progressive (PGR), were on the list.
Analysts said forward EPS estimates saw some of the strongest positive revisions in the market. They believe that estimates for the coming quarters and into 2027 are likely not optimistic enough.
BGC Group, a financial brokerage and fintech firm, has a “dominant position” in energy derivatives, the analysts wrote. Meanwhile, cost-cutting efforts by JB Hunt Transport Services (JBHT) are “paying off,” according to analysts.
Industrial and energy stocks
Analysts have identified several natural gas and energy-related stocks, such as Eversource Energy (ES) and Oneok (OKE), along with mining giant Freeport-McMoRan (FCX), whose shares analysts expect to recover after an accident and outage at one of its mines.
The list also included industrial companies such as packaging products maker Amcor ( AMCR ), which analysts said “offers undervalued upside potential” following its recent acquisition and appointment of a new CFO.
Dental and medical products manufacturer Henry Schein (HSIC) rounded out the list.
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