Bank of America says stick with value stocks, especially these neglected names
The recent rotation into value has caused some long-dormant stocks and sectors to wake up, but not every value play is getting enough attention, according to Bank of America. Cyclical sectors, such as energy stocks, are having one of their best stretches in years, and value fund managers are seeing major returns. However, the firm said in a note that investors may want to look at stocks that haven't seen a surge of interest. "Given the high frequency of extreme moves in trading and style rotation, investors would have been better off investing in stocks neglected by Wall Street and avoiding those with High Trading Volume," the note said. To help with this, the firm identified stocks with low valuations based on projected price-to-earnings and those with low weights in long-only funds relative to their weight in the S & P 500. Bank stocks have been some of the best performers since late last year, but some financial stocks still appear cheap. Prudential and Invesco have forward price-earnings ratios of 6.6 and 8.0, respectively, and are significantly underweight in long-only portfolios, according to Bank of America. Dow component Walgreens Boots Alliance also made the list. Shares of the pharmacy chain have surged more than 28% to start the year, but the stock is down from where it was trading in late 2019. Another market stalwart on the list is AT & T . The telecom company has pushed into the media space in recent years and now owns a streaming service in HBO Max. Over the past 12 months, the company's shares are down 13%, well below the performance of the broader market. One stock on the list may be neglected by most fund managers, but it has drawn the attention of a high-profile activist. FirstEnergy disclosed in mid-February that Carl Icahn was planning to build a significant stake in the company. Shares have been mostly flat since Icahn's interest was revealed.

Ford Motor Co. displays a new 2021 Ford F-150 pickup truck at the Rouge Complex in Dearborn, Michigan, Sept. 17, 2020. Rebecca Cook | Reuters