BoA global stock picks in a period of high inflation

Bank of America analysts have identified a number of global stocks that they believe will benefit as the economy enters a boom cycle.

Bank of America believes that the cycle, marked by rising inflation and bond yields, along with declining growth, may benefit some stocks that were “strongly outperforming” in previous boom periods in 2005 and 2010.

The boom shares are considered “cheap” and have “high growth,” the bank’s strategists, led by Paulina Strzelinska, said in a November 17 research note.

The bank noted that the overlap between these two trends is currently the highest of all time, suggesting a record number of stocks that are considered cheap and have high growth potential.

The best boom stocks are trading at a 44% discount on the market compared to the long-term average, which suggests good positioning, strategists said.

Stock picks

The selected shares have an overweight rating in the financial services and energy sectors. “Banks are benefiting from rising bond yields, while higher inflation is expected to support energy [firms],” the bank explained.

Bank of America’s selected shares in the banking sector include Britain’s NatWest, Barclays, Lloyds and Standard Chartered, France’s Credit Agricole and Societe Generale, the Dutch financial services company Exor, Germany’s Deutsche Bank and Spain’s CaixaBank.

In the energy space, the bank’s choices include the Spanish energy company Repsol, the Norwegian energy company Equinor, the Italian oil company Eni, and BP.

Other nominees in Bank of America’s basket include the world’s largest steelmaker ArcelorMittal, German chemical maker Covestro, Danish shipping giant Moller-Maersk, British luxury carmaker Rolls-Royce and Anglo-Swiss mining company Glencore.

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