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BANK OF AMERICA: Buy these 31 unheralded stocks as the recovery's hottest trades of recent months continue to gain strength in 2021

BANK OF AMERICA: Buy these 31 unheralded stocks as the recovery's hottest trades of recent months continue to gain strength in 2021

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Smaller and less-expensive company stocks have been on a powerful run, and Bank of America says it will continue.




Strategist Jill Carey Hall says that even as the recovery slows, those stocks should beat out larger ones.




Bank of America's analysts picked 31 smaller companies they expect to outperform going forward.




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Smaller and cheaper stocks have been on a tear over the last few months, and Bank of America says the good times are nowhere near over."Following the Russell 2000's best quarter ever, we continue to prefer small caps over large caps in 2021," US Equity Strategist Jill Carey Hall wrote in a note to clients. She says a series of factors including growing manufacturing activity, rising consumer sentiment, and another economic stimulus package will all help smaller companies.Carey Hall says the economy is still in recovery mode, which is the best phase for small-company stocks and for "value" stocks that are cheap by traditional measures like book value. But she writes that investors don't need to sell them when the economy gets onto firmer footing."Even if the recovery slows and we move into the next phase ("Mid cycle"), small caps have historically outperformed large caps," she said.That said, she cautions that the stocks could struggle in the next few months because of the increase in COVID-19 cases over the winter. But Carey Hall thinks it won't last long."Small cap profits should bounce back stronger than their decline, and guidance trends are strongest here of the three size segments," she said.Based on that view, Carey Hall and her team pulled together the top small- and mid-size stock recommendations from her firm's analysts. They're pulled from more than 800 companies that have market capitalizations of at least $1 billion and less than $15 billion.Many of those selections are consumer-focused companies that will benefit from the ongoing vaccine rollout. Carey Hall says many of the companies are well-positioned both for the current environment and a post-pandemic world.Another theme that clearly emerges is value."Nearly 80% of the stocks are on the Russell small or mid cap Value benchmark," she wrote.The analysts picked 31 "Buy"-rated stocks, and they're ranked from lowest to highest based on how much upside they offer to Bank of America's price targets. Those figures are calculated based on Thursday's closing prices. Each stock pick includes an analyst's investment thesis.

31. Charles River Laboratories

BANK OF AMERICA: Buy these 31 unheralded stocks as the recovery's hottest trades of recent months continue to gain strength in 2021


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