Analysts at Bank of America have revealed their top buy-rated stocks for 2024. The firm said these companies have plenty of upside and are well positioned in a bumpy macro environment. CNBC Pro combed through top Bank of America research to find the must-own stocks heading into the new year. They include Amazon, AT & T, General Electric , Tenet Healthcare and Union Pacific. General Electric Bank of America called General Electric an “incoming pure-play aviation stock” in its recent industrials outlook note. Analyst Andrew Obin said GE is poised to pounce heading into 2024 as it continues to separate its remaining businesses. The company is scheduled to spin off its energy and renewables segment Vernova in the spring, and Obin said that should lead to a re-rating of its GE Aerospace unit . “We forecast 59% y/y EPS growth in 2024, driven by rising profits in Aerospace and narrowing losses in Renewable,” he wrote. Shares are up more than 90% this year, but Obin said the stock has more room to run as “U.S. policy is supporting reshoring of critical industries and new markets.” Despite the uncertain near-term macro, the firm said it has confidence in the U.S. manufacturing capex cycle. “We forecast GE to have the fastest earnings growth in our coverage and it will become a pure-play aerospace stock in April,” he said. Union Pacific “Get on board this once in a generation upturn,” analyst Ken Hoexter said in a note to clients, announcing Union Pacific as a top idea for 2024. The firm said there’s no shortage of positive catalysts for the railway stock, so investors should buy it now. “New CEO Jim Vena is rapidly changing the culture at Union Pacific, has enhanced service quickly, and volumes are topping our targets 4Q-to-date,” Hoexter said. Earnings growth is projected to be in the “sustained mid- to upper-teens earnings growth in the near term,” according to Hoexter. “Service is showing broad improvement,” with Union operating at service levels not seen in five years, the analyst wrote. “We believe this will drive operating margins to surpass our and Street targets quicker than expected,” Hoexter added. The analyst has a price target of $271 per share, up from $264. Earlier this month, the firm added Union Pacific to its “US1 best ideas” list. Shares are up 17% this year. AT & T “There was a time for skepticism when AT & T revamped its wireless go-to-market strategy, refocused the company on connectivity, divested non-core assets, cut the dividend, and restored subscriber growth,” analyst David Barden said. The stock has come a long way, leading the analyst to name the telecom giant as a top idea for 2024. “[Earnings before interest, taxes, depreciation and amortization] growth and falling capex will support rising free cash flow, improved dividend coverage, and deleveraging,” Barden said. Improved customer service and network means that churn is slowing, the analyst said. This will allow the company to raise prices, he added. “Consistency has answered the question, in our view, about the sustainability of solid financial results,” Barden said. Shares of the company are down 10% this year. AT & T is “a ‘show me’ story that’s showing up,” Barden added. Union Pacific “Get on board this once in a generation upturn. … New CEO Vena is rapidly changing the culture at UNP, has enhanced service quickly & volumes are topping our targets 4Q-to-date. … Service is showing broad improvement … We believe this will drive operating margins to surpass our & Street targets quicker than expected. … New CEO Vena, a PSR guru and protégé of rail expert Hunter Harrison, reiterated his target to be industry margin leader, which should lead to sustained mid- to upper-teens earnings growth in near term.” Amazon “Amazon remains our top eCommerce stock as the company is well positioned for margin expansion in 2024 from continued optimization of its regional logistics network, the ramp of advertising opportunity & reacceleration of AWS revenues. For North America retail, we project 5% GAAP operating profit margins in 2024, approx. 1.5pts y/y, and see upside on increasing utilization of its logistics network and advertising growth.” Tenet Healthcare “Our top pick is THC, who benefits from solid hospital fundamentals but also the increasing shift into ASCs and progress on deleveraging. We expect THC to generate $550B in true FCF in 2024 which gives it plenty of optionality. … THC’s shift towards faster growth, lower capital intensity Ambulatory Surgery Centers (ASCs) is a positive for return on capital, while strong cost control is improving performance in the core hospital business, aided by the industry tailwind of accelerating pricing.” AT & T “A ‘show me’ story that’s showing up There was a time for skepticism when AT & T revamped its wireless go-to-market strategy, refocused the company on connectivity, divested non-core assets, cut the dividend, and restored subscriber growth. Consistency has answered the question, in our view, about the sustainability of solid financial results.” General Electric “US policy is supporting reshoring of critical industries and new markets. … We forecast GE to have the fastest earnings growth in our coverage and it will become a pure-play aerospace stock in April. … incoming pure-play aviation stock. … We forecast 59% y/y EPS growth in 2024, driven by rising profits in Aerospace and narrowing losses in Renewable.”
