In a recent research note, Bank of America is expressing optimism about several stocks that are trading at fair value or even a discount, anticipating strong performance in the first quarter of 2026. Despite the S&P 500 approaching record valuations, the bank’s analysts believe that opportunities do still exist, albeit limited due to many stocks trading at a premium this year. “There’s no way to sugar coat it — the S&P 500 is expensive,” stated Savita Subramanian, BofA’s U.S. Equity Strategist.
The bank identified ten stocks poised for growth, covering a diverse array of nine industries, including retail, energy, and shipping. Prominent among these are Amazon.com, Boeing, and Dollar General, all of which the analysts forecast will excel in the upcoming quarter.
Amazon stands out as a noteworthy prospect. BofA analysts suggest that the e-commerce giant has significant growth potential, particularly as its Amazon Web Services (AWS) business continues to expand. Amazon is expected to capitalize on the burgeoning artificial intelligence trend, and revenue from AWS is likely to show substantial acceleration this year. The firm is keenly focused on advancing projects in quantum computing and custom silicon, overseen by its newly restructured AI leadership team. “Our thesis is that AWS can show better relative performance, with upside to street revenue estimates, as the business enters 2026 in a much better capacity position than 2025,” explained strategist Anthony Cassamassino. BofA has maintained a buy rating on Amazon, with a price target of $303. Over the past year, Amazon’s stock has gained 2.9%.
In the retail sector, Dollar General is anticipated to benefit from potentially higher tax refunds in early 2026, which could enhance its business performance. BofA analysts observed that the company’s ongoing efforts to streamline operations and cut inventory are yielding positive results, which should bolster its bottom line in the upcoming quarter. The bank also holds a buy rating on Dollar General stock, setting a price target of $160. Notably, shares have surged more than 80% in the last 12 months.
Boeing is another key player on BofA’s list, with the firm projecting an increase in its commercial aircraft production rates. Following a period of operational instability that led some airlines to reassess their orders, Boeing’s manufacturing efforts are now stabilizing. “Production remaining stable is a key to investor confidence and the name building momentum for the year,” Cassamassino remarked. The stock enjoys a buy rating from BofA, which has set a price target of $270. Boeing’s stock has climbed nearly 32% over the past year.
In summary, while the S&P 500 appears pricey, Bank of America’s proactive stock selections highlight opportunities that could yield significant returns, bolstered by promising trends in various sectors. Investors looking toward the first quarter of 2026 may want to consider these stocks as part of their strategy, especially given the positive outlook provided by BofA’s analysts.
Original Source: https://www.cnbc.com/2026/01/02/bank-of-america-is-betting-on-these-stocks-in-the-first-quarter-of-2026.html
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Publish Date: 2026-01-03 04:12:00
