The economic downturn appears to be ending and a recovery is on the horizon, according to Bank of America. The bank's head of US equity and quantitative strategy, Savita Subramanian, has identified 50 stocks best positioned to profit from this anticipated rebound.
For months, Wall Street has been concerned that restrictive monetary policy might lead to a recession and market downturn. However, Bank of America analysts now believe that the economy has turned a corner and could be on the upswing.
In a recent note to clients, Subramanian wrote that a second consecutive month of improvement in the firm's economic regime indicator points to improving conditions for the US economy. This indicator is comprised of eight key macroeconomic indicators including inflation, GDP forecast, 10-year Treasury yield, ISM PMI, and capacity utilization.
Subramanian noted that cyclical stocks — financials, industrials, and materials — tend to perform well during recovery phases. She has identified specific stocks that have performed well during previous recovery periods after screening for stocks in the top 10% of the S&P 500 based on various investment factors.
Among the 50 stocks highlighted are Alaska Air Group (NYSE:NYSE:ALK), American Airlines (NASDAQ:NASDAQ:AAL), Assurant (NYSE:NYSE:AIZ), Bath & Body Works (NYSE:NYSE:BBWI), and BorgWarner (NYSE:NYSE:BWA). Other notable mentions include Ford Motor Co . (NYSE:NYSE:F), Fox Corp. (NASDAQ:FOXA), MGM Resorts International (NYSE:NYSE:MGM), Southwest Airlines (NYSE:NYSE:LUV), and Warner Bros. Discovery (NASDAQ:NASDAQ:WBD).
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