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Investors looking for outperformance in the third quarter may want to check Bank of America’s global “Best of Breed” portfolio. Of the more than 3,000 companies in the bank’s coverage universe, just 26 qualified for the firm’s list, which outperformed the MSCI All Country World Index by 33.7 percentage points in 2024 through the end of May. Its third-quarter Best of Breed list is heavily exposed to tech, with the sector netting a 64% portfolio weighting. The U.S. as a country is also the most prominent, with 80% of stocks coming from that one country. Here are some of the stocks in the portfolio: Nvidia made the list after a monstrous run this year, surging about 159%. Shares are also up around 3,053% in the past five years. Last month, the chipmaker surpassed $3 trillion in market cap for the first time and briefly passed both Apple and Microsoft to become the world’s largest company by market cap. Its market cap sits at nearly $3.16 trillion. BofA reiterated Nvidia as a buy on Tuesday, saying it was the “most-owned” semi stock among fund managers. Morgan Stanley is also bullish on the stock, citing existing demand for the company’s microarchitecture. The firm reiterated its overweight rating and raised its price target to $144 from $116 in a Monday note. This implies around 17% upside from Tuesday’s close. Shopify also made the cut. While shares have fallen more than 14% in 2024, they have surged more than 112% over the past two years. BofA has a neutral rating on the stock, but Citi is optimistic about its path forward, adding Shopify to its focus list last week. The firm sees revenue growth accelerating in the second half of this year and operating income growth inflecting in 2025. Citi also cites Target teaming up with Shopify to expand its third-party marketplace as a catalyst for gross merchandise volume growth. “In the spirit of identifying good ideas for a software recovery, we are reiterating our Buy/H rating on SHOP and adding it to our U.S. Focus List,” analyst Tyler Radke said in a note. The firm upped its price target by $1 to $96, which implies 45% upside from Tuesday’s close. Others such as U.S. software company Palantir Technologies and China-based tech company NetEase also qualified for the screen. Shares of the companies are up around 50.5% and 3%, respectively, this year.
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