The bank expects the U.S. market to remain highly volatile, with the S&P 500 likely to fall another 25% from current levels.
“Our forecast for 2023 has two parts. In the first half of the year, the S&P 500 could fall as much as 3,000 bp due to the recession, lower corporate earnings forecasts, high inflation, and the Fed’s quantitative tightening (QT). Then a gradual recovery will begin, thanks to clarity about the economy’s prospects, less volatility in interest rates and an improved outlook for companies,” the analysts wrote.
What’s an investor to do?
Bank of America believes investors should own stocks of quality companies amid high volatility and a slowing economy. Strategists have compiled a selection of such securities. The names below have a relatively low beta to U.S. GDP ratio and a S&P Quality Rank of B+ or better.
Valero Energy #VLO
Target price is $177, upside potential +49%
Lowe’s #LOW
Target price – $253, upside +25%
AutoZone #AZO
Target price – $2850, upside +16%
Lockheed Martin #LMT
Target price – $550, upside +14%
Kroger #KR
Target price – $58, upside +25%
Tractor Supply Company #TSCO
Target price – $270, upside +24%
