The bear market rally off the lows printed in October (which matched the June lows) has been a boon for beleaguered investors as the stock market has had one of the worst years since the turn of the century. While a Santa Claus rally could resume after the Federal Reserve meets next week, there is a very good chance that the selling we have seen this week will return in January, and it may not be pretty for investors.
In a recent Bank of America Securities report, the economics team sees the potential for a collapsing labor market next year that could trigger a big rise in unemployment. In a somewhat chilling warning, the BofA team also recommended selling any stock rally in front of the potential torrent of job losses.
BofA Securities Chief Investment Strategist Michael Hartnett is one of the most respected voices on Wall Street. While not a perma-bear, his preference for the first half of next year is bonds and decidedly not stocks. We decided to screen the BofA Securities stocks research universe for companies that serve as bond market proxies. These include utilities, energy midstream companies, telecommunication companies, consumer staples and net lease real estate investment trusts (REITs), where the tenant assumes all the property costs.
These seven top companies are all rated Buy at BofA Securities and look like solid and safe ideas as we finish the year and head into 2023. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
AT&T
The legacy telecommunications company has been going through a long restructuring, has lowered its dividend and has sold off or merged underperforming assets. AT&T Inc. (NYSE: T) provides telecommunications, media and technology services worldwide.
Its Communications segment offers wireless voice and data communications services and sells handsets, wireless data cards, wireless computing devices with carrying cases and hands-free devices through its own company-owned stores, agents and third-party retail stores.
AT&T also provides data, voice, security, cloud solutions, outsourcing and managed and professional services, as well as customer premises equipment for multinational corporations, small and midsized businesses, and governmental and wholesale customers. In addition, it offers broadband fiber and legacy telephony voice communication services to residential customers.
The company markets its communications services and products under the AT&T, Cricket, AT&T Prepaid and AT&T Fiber brand names. The company’s Latin America segment provides wireless services in Mexico and video services in Latin America. This segment markets its services and products under the AT&T and Unefon brand names.
AT&T stock investors receive a 5.85% dividend. BofA Securities has a $25 price objective. The consensus target is $22.28, and the stock closed on Wednesday at $19.30.
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