7 Upgraded Stocks to Buy in June
Analysts ID stock upgrades as recovery looms.
For the second straight month, the S&P 500 rallied off March lows as investors continue to grow optimistic about an end to the health crisis and a ramp up in the economy. First-quarter earnings season wasn't as bad as many had feared. In addition, Congress and the Federal Reserve have made it clear that they will go to extreme measures to support the economy. Most analysts are expecting the second quarter to mark the bottom for corporate earnings. Here are seven of Bank of America's most recent stock upgrades for investors to buy ahead of the recovery.
Ametek (ticker: AME)
Ametek is a diversified industrial company that produces measurement instruments and a wide range of motor products. Analyst Andrew Obin recently upgraded Ametek and says the company has executed better than any of its peers in cutting costs in response to falling volumes. Obin says investors should look past the second quarter and focus on a potential upturn in the second half of 2020. The company's strong balance sheet will help it navigate the near-term headwinds and could set the stage for opportunistic, growth-driving acquisitions. Bank of America has a "buy" rating and $90 price target for AME stock.
Boise Cascade Co. (BCC)
Wood products manufacturer Boise Cascade is the second-largest U.S. producer of plywood and engineered wood products. Analyst George Staphos upgraded Boise and says the overall outlook for wood suppliers has brightened in the last couple of months. Bank of America raised its price forecasts for oriented strand board, plywood and lumber because of stronger-than-anticipated trends in home improvement and new construction. Staphos says Boise has a solid balance sheet and should benefit from the demand tailwinds. Bank of America has a "buy" rating and $39 price target for BCC stock.
Rockwell Automation (ROK)
Rockwell Automation is a global industrial automation equipment, software and services company. Obin upgraded Rockwell and says a combination of supply chain disruptions and rising geopolitical tensions between the U.S. and China has renewed focus on improving American manufacturing capacity. Obin says he is already seeing signs of "reshoring" U.S. pharmaceutical and semiconductor production rather than relying so heavily on foreign producers. Industrial automation will be a key component in keeping U.S. industrial production costs in check and will create tremendous demand for Rockwell's services. Bank of America has a "buy" rating and $250 price target for ROK stock.
Focus Financial Partners (FOCS)
Focus Financial Partners is a partnership of more than 50 registered independent advisors that collectively manages more than $126 billion in assets. Analyst Michael Carrier upgraded Focus and says the company's improving growth outlook could provide opportunity for long-term investors. Rising financial markets and a recovering economy should drive organic growth for Focus, while business reopenings could create buyout opportunities for the company, according to Carrier. Focus has also done an impressive job of managing internal financial metrics such as net leverage ratio and interest expense. Bank of America has a "buy" rating and $29 price target for FOCS stock.
Duke Realty Corp. (DRE)
Duke Realty is one of the largest U.S. real estate companies and specializes in bulk industrial assets. Industrial real estate investment trusts were performing well before the health crisis, and analyst James Feldman says rising e-commerce demand, higher inventory and an increased focus on domestic U.S. manufacturing will create long-term tailwinds for REITs like Duke. Duke's assets in regions such as Texas and the Southeast should be particularly strong performers in the next era of U.S. industry, Feldman says. Bank of America has a "buy" rating and $40 price target for DRE stock.
Camden Property Trust (CPT)
Camden Property Trust is a REIT that owns and manages U.S. multifamily apartment communities. Analyst Jeffrey Spector says Camden's geographic exposure to the Sun Belt region, and particularly the Houston market, bodes well for the company's outlook. About 11% of Camden's properties are in the Houston area, and Spector says rising supply there hasn't had nearly as negative of an impact as he expected. Spector says a shift toward remote work could drive renters out of higher-priced coastal cities to lower-priced Sun Belt cities. Bank of America has a "buy" rating and $114 price target for CPT stock.
Kraft Heinz Co. (KHC)
Food giant Kraft Heinz has had a brutal couple of years, and the stock has lost two-thirds of its value in the last three years. Still, analyst Bryan Spillane upgraded the stock and says it's finally time for long-term investors to start dipping their toes into the battered ketchup maker. Spillane says Kraft shares trade at a 40% valuation discount to their packaged food peers, and the company has plenty of cash flow to both maintain its 5.2% dividend and pay down its debt. Bank of America has a "buy" rating and $38 price target for KHC stock.
Upgraded stocks to buy in June:
-- Ametek (AME)
-- Boise Cascade Co. (BCC)
-- Rockwell Automation (ROK)
-- Focus Financial Partners (FOCS)
-- Duke Realty Corp. (DRE)
-- Camden Property Trust (CPT)
-- Kraft Heinz Co. (KHC)
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