These strong stocks are under-owned and have momentum, Bank of America says
Charter Communications and Toast are among a handful of overlooked stocks in the market that could see gains ahead, according to Bank of America. Stocks have been ripping higher as President Donald Trump reverses or delays many tariffs laid out in early April. The S & P 500 has surged more than 20% since hitting an intraday low on April 7. Traders continue to hunt for good bargains, however, as volatility persists amid on ongoing policy changes. In a recent note to clients, Bank of America highlighted stocks that are under-owned by funds and have catalysts for upward momentum. Specifically, the firm screened for stocks that meet three criteria: Low fund ownership Funds that do own the stock have an overweight allocation relative to their benchmark Have a high "triple momentum rank": This metric combines earnings, price, and news momentum to determine when a stock is in vogue or not "Our analysis shows that stocks that have high ownership and are overweight can outperform for years if a stock's fundamentals remain relatively attractive. Therefore, we believe the challenge for investors is to differentiate between crowded trades with a positive catalyst and crowded trades with a negative catalyst," analyst Nigel Tupper said in a note to clients, outlining his methodology for the stock screen. "Similarly, there is an opportunity to identify under-owned stocks which have a positive catalyst," he added. Take a look below for the group of U.S.-listed companies that made the screen, which uses data as of April 30. Charter Communications has low fund ownership of 17%, while having one of the higher "triple momentum" ranks at 93. Shares of the telecommunications giant, which owns Spectrum, have jumped 20% this year. Charter on May 16 announced an agreement to merge with privately held rival Cox Communications in a deal worth $21.9 billion — one of the biggest global deal transactions this year that combines two of the largest U.S. cable and broadband operators. Other stocks on the list outperforming the broader market include Howmet Aerospace and Toast . Howmet, which supplies parts for planes built by Boeing, has been on a monster run over the past year, gaining roughly 54% year to date and hitting a new 52-week high on Tuesday. Howmet has benefited from growth in the defense and commercial aerospace market and boasted strong first-quarter earnings results posted earlier this month. According to Bank of America's screener, however, the company has just 23% fund ownership. Shares of Toast are similarly overlooked with 18% fund ownership, according to the screener. The stock has rallied 18% this year.
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