After a dreadful first six months of 2022, which culminated with a S&P 500 market low of 3,666 on June 16, we have seen one of the strongest rallies in a while. The S&P 500 rally of almost 16% pulled the venerable index out of bear market status, and much to the delight of the always bullish Wall Street crowd, we even have seen the return of the left-for-dead meme stock army.
While on the surface this may all seem good for beleaguered investors who saw their 401(k)s and IRAs absolutely hammered, the reality is this may be the proverbial bear market rally. The impetus for the big run has been consumer and producer price index numbers that came in slightly below estimates this week, lending credence to the peak inflation argument, which in turn bolsters the policy pivot narrative for the Federal Reserve.
However, new claims for unemployment have remained notably high, coming in this week at the highest in 2022, as are continuing claims. The inflation numbers, while cooling some, are still way above the Fed’s targets. In their second-quarter earnings reporting, many companies noted softening demand, and most across Wall Street feel earnings estimates going forward are way too high.
What makes sense now is to take profits after the big move and look at blue chip dividend stocks that still offer significant upside. We screened the Goldman Sachs Conviction List, the firm’s top stock ideas, and found seven that make sense to rotate to now. Of course, all are rated Buy, but it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Bank of America
The company posted solid second-quarter results, and Warren Buffett owns a stunning 1.1 billion shares. Bank of America Corp. (NYSE: BAC) is a ubiquitous presence in the United States, providing various banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, corporations and governments in the United States and internationally. It operates 5,100 banking centers, 16,300 ATMs, call centers and online and mobile banking platforms.
Bank of America has expanded into several new U.S. markets, with scale across the country positioning it ideally to benefit from accelerating loan growth over the next two years. Moreover, unlike smaller peers, scale allows the bank to increase investment substantially over the next few years without notably jeopardizing returns, driving further market share gains.
Shareholders receive a 2.45% dividend. Goldman Sachs has a $42 price objective on Bank of America stock. The consensus target is $42.25, and shares closed on Thursday at $35.91 apiece.
Bunge
This top mid-cap stock has rallied nicely off the July lows but still offers investors an outstanding entry point. Bunge Ltd. (NYSE: BG) operates as an agribusiness and food company worldwide. It operates in the following segments.
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