Six top stock picks in my favourite sector from BofA analysts
Daily roundup of research and analysis from The Globe and Mail's market strategist Scott Barlow
Health care is my favourite sector because I don't have to worry as much about macroeconomic factors and the sector gets free growth from demographics.
BofA Securities published a comprehensive health care report, including stock ideas, on Monday,
'Blame it on generalists' interest, ETF/passive inflows, but Health Care stocks are more correlated with one another than ever … Health Care is near a max overweight by active funds vs. Tech perhaps due to China/tariff risks. But the advent of a 'beautiful deal' with China may set the stage for a relief rally in Tech vs. Health Care, especially as Tech EPS revisions have been relatively healthy … Health Care used to have net cash. Now it's as levered as Industrials, and its floating vs. fixed rate risk is the same as that of the S&P 500. More EPS volatility than Financials (another sector shift since the GFC). Health Care's 5yr EPS vol is now in-line with S&P overall, and risk may be mispriced in Pharma/Biotech (lower beta than the S&P 500 but with higher EPS volatility) … still ranks #2 In short-term sector model: Despite the risks above, S&P 500 Health Care ranks highly across valuation, earnings revisions and price momentum. Momentum may be reversing in cyclicals vs. defensives as we saw this week. We remain underweight Health Care in our S&P 500 sector strategy … Secular tailwinds still in force: AI, demographics: GLP-1 was a game changer in 2023 and AI/aging are long-term bullish themes. Aging demographics is the biggest source of increased entitlement spending going forward as retirement age has remained flat since 1983 vs a jump in expected lifespan'
The six stocks as chosen by BofA analysts are Cardinal Health Inc. (CAH-N), CVS Health Corp. (CVS-N), Danaher Corp. (DHR-N), Eli Lilly & Co. (LLY-N), The Cigna Group (CI-N) and Thermo Fisher Scientific Inc. (TMO-N).
***
The results of BofA Securities' fund manager survey (FMS) are in, summarized by investment strategist Michael Hartnett,
'Pre-Geneva (75% of FMS completed before announcement of US-China talks) investor sentiment glum, especially on US assets; May FMS not as extreme as uber-bearish April FMS (recession seen as less likely, cash levels cut to 4.5% from 4.8%, major tech reallocation), but bearish enough to suggest pain trade modestly higher given positive US-China trade war ceasefire (FMS investors expected 37% tariffs not 30%) … Investors less pessimistic: net 59% expect weaker global growth (vs 82% in April), net 1% say recession likely (vs 42% in April), 'soft landing' (61%) back as consensus outlook (hard landing 26%, no landing 6%) … investors most UW US dollar since May'06, slashed big bond OW to neutral, said gold most overvalued in 20 years ('long gold' = #1 crowded trade), trimmed global equity UW [underweight] via up-in-Europe not US stocks (most UW since May'23); FMS most OW large vs small cap since Jun'22, pre-Geneva big rotation to tech (biggest MoM rise since Mar'13) & industrials, out of staples, healthcare & energy (biggest UW on record). FMS Contrarian Trades: if 'no landing' most +ve for US stocks, EM, small cap, energy and -ve gold; if 'hard landing' most +ve health care and -ve Eurozone & banks'
***
Citi U.S. strategist Scott Chronert assesses markets after the U.S. delay in China tariffs,
'In our weekend note, What Q1 Earnings Are Telling Us About Tariff Policy, we stressed the point that earnings growth expectations for the Cyclical and Defensive clusters within the S&P 500 continue to trend lower. On the other hand, the Growth cluster (esp. Mag 7) have continued to support full year index level consensus … our immediate takeaway is to presume a broader sentiment relief with the possibility of the S&P 500 working through our 5800 target. This probably includes some short covering among those parts of the market deemed as most exposed to China tariffs (i.e., Tech and Consumer Discretionary). However, so long as a 10% broad tariff remains an effective tariff line of sight, fundamental pressures should continue to linger. This makes it difficult to push valuations materially higher than the current 22.6x TTM [trailing twelve months] and 20.4x NTM levels … All told, we main constructive on the structural US equity set up, but expect a need to consolidate gains from the post Moratorium Day rally. Our preferred long expression is via Growth per OWs in Tech (esp SW[software] and Semis) and Comm Services'
***
Bluesky post of the day:
Diversion: 'The Early Returns on NYC's Congestion Pricing Are Pretty Impressive' – Gizmodo
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CTV News
an hour ago
- CTV News
Men are more likely than women to die of broken heart syndrome, study finds
Characterized by chest pain, palpitations and shortness of breath, takotsubo cardiomyopathy is thought to be caused by extreme emotional or physical stress. LaylaBird/E+/Getty Images via CNN Newsource A 59-year-old man arrived at the Peking University First Hospital in Beijing for a procedure when he started having severe chest pain and shortness of breath. Four months earlier, he had cancerous tumors removed from his bladder. Around his family, he tried his best to appear strong and avoided discussions of his health. Privately, his severe anxiety over the possibility of a cancer recurrence kept him awake at night. Doctors said the man was experiencing takotsubo cardiomyopathy — also known as broken heart syndrome, as documented in a 2021 case study. The rare stress-induced heart condition has been observed primarily in women, but a study published in the Journal of the American Heart Association in May found that the illness may be more deadly for the men who get it. Thought to be caused by extreme emotional or physical events — such as learning about the death of a loved one, winning the lottery or lifting a heavy sofa — takotsubo cardiomyopathy, or TC, occurs when the heart muscle is flooded with stress hormones, causing part of it to 'freeze' in place. As the heart struggles to properly pump blood, symptoms resemble those of a heart attack, including chest pain, heart palpitations and irregular heartbeat. The new study analyzed data from nearly 200,000 patients hospitalized for TC in the United States between 2016 and 2020. While women accounted for 83% of the cases, men were more than twice as likely to die from the condition — with a mortality rate of 11.2%. 'The differences between men and women are a very striking finding,' said study coauthor Dr. Mohammad Reza Movahed, a clinical professor of medicine at the University of Arizona in Tucson. 'It raises a new, interesting question that should really be studied.' Broken heart syndrome in men vs. women Similar to differences between men's and women's cardiovascular health more generally, the discrepancies in TC death rates are not well understood, Movahed said, especially because they counter trends in other heart diseases. It's widely theorized, however, that differences in hormone levels play a role. Stressful situations trigger the adrenal glands to release our fight-or-flight hormones, called catecholamines. They are meant to increase our blood pressure and raise our heart rate, but extreme levels can temporarily 'stun' cells in the heart's tissue, leading to TC, Movahed explained. Men are thought to produce more catecholamines during stressful situations compared with women, possibly leading men to present with more severe cases of TC, he suggested. Estrogen, a sex hormone produced at higher levels in women, may also have a protective effect on the cardiovascular system, making it easier to manage an extreme influx of catecholamines and reducing the risk of severe complications from TC, said Dr. Louis Vincent, a noninvasive-cardiology research fellow at the University of Miami, who coauthored a similar, multiyear study investigating discrepancies in men and women who had TC. Vincent was not involved in the new study. Beyond biological differences, social factors may play a role as well. 'Most (physicians) know about takotsubo, but they may think of it as a disease just affecting women, so the diagnosis might be overlooked in men,' said Dr. Deepak Bhatt, a cardiologist and the director of Mount Sinai Fuster Heart Hospital who was not involved in the study. 'With misdiagnosis, care is delayed, and that can sometimes lead to worse outcomes.' Men may also seek care at a later stage of illness, believing that their symptoms are manageable or may pass, said Dr. Alejandro Lemor, an assistant professor of interventional cardiology at the University of Mississippi Medical Center who was also not involved in the study. Deadly complications from TC include blood clots, stroke, cardiac arrest and heart failure, Lemor said. If the condition is caught early, medications can reduce the risk of having these complications, restore proper heart function and allow for full recovery within weeks, he added. Higher mortality rates in men need further study Movahed's team was able to factor for important variables like age, race, income, chronic lung disease, hypertension and diabetes in the findings. However, there was no patient data on other comorbid diseases, such as a history of stroke or the presence of a Covid-19 infection, Vincent said. Additionally, the new study included in-patient diagnostic data only for those hospitalized with TC, so those who received outpatient care or died later from complications outside the hospital were likely not counted in the analysis, Movahed noted. To establish a firmer explanation for the differences in mortality rates between men and women and further test treatment methods, a more detailed dataset would be needed, Vincent said. 'People should be aware in studies like this, we're presenting findings that are based on diagnostic codes, and we're not looking at patient procedures or lab results,' Vincent said. 'But it's powerful in the sense that it lets us look at large populations and look at trends. And I think that this trend of a higher mortality in men is worth taking a deeper look into.' Don't try to 'tough it out' Sudden, severe chest pain or shortness of breath should always be treated as a medical emergency, warned Bhatt, who is also a professor of cardiovascular medicine at the Icahn School of Medicine at Mount Sinai in New York City. 'It's not a time to tough it out at home or get on the internet to figure it out. … Don't try to track down your primary care provider. Call emergency services,' Bhatt said. 'Time matters. By winning those few hours, you could save yourself irreparable damage to your heart.' Symptoms following physical stressors — a common cause of TC in men — should not be ignored, Movahed said, especially preceding medical events such as asthma attacks, seizures or complications from drug use. And while TC is caused by sudden stress, Bhatt said that managing chronic stress with daily meditation or exercise can lead to better cardiovascular health overall while giving you routines to fall back on in unexpected situations.
Globe and Mail
an hour ago
- Globe and Mail
If I Could Only Buy and Hold a Single Stock, This Would Be It.
Let's make this clear from the start: I would never recommend owning just one stock for the long haul. A proper nest egg needs some variety, either in a carefully assembled basket of diverse stocks or focused on a broad market-tracking exchange-traded fund (ETF). For the sake of argument, however, I could imagine buying some Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) stock and just letting it roll. The usual suspects aren't diverse enough for this challenge I know, I know. You wanted me to double down on Amazon (NASDAQ: AMZN), whose stock has absolutely crushed the general market in the long run. Or I could have picked Netflix (NASDAQ: NFLX), the media-streaming pioneer that's created most of my wealth so far and that might join the trillion-dollar market cap club in a few years. Perhaps you expected Nvidia (NASDAQ: NVDA), with its unmatched five-year returns and huge long-term future in the artificial intelligence (AI) industry. These stocks sure tick a few of the right boxes, but none of them are as naturally diversified as Berkshire Hathaway. That's really what I'm looking for in a "single stock for all ages." Why my biggest winners don't make the cut I own all three of the suggested Berkshire alternatives above, by the way. Netflix Netflix was an early name in my portfolio, inspired by fellow Fool Rick Munarriz's in-depth analysis of the company in the mid-2000s. When Netflix went through the Qwikster-branded separation of DVD and streaming services, I doubled down on my investment at a fantastic price. That particular Netflix stake has gained 10,350% in less than 14 years. But that's just my favorite play on the future of digital media services. I would never dare to make Netflix my only holding, just in case somebody builds a better media-streaming mousetrap. Amazon I wish I had pounced on Amazon much earlier, like Motley Fool co-founders Tom and David Gardner did. But I dragged my feet, and watched the online bookstore become an e-commerce buffet with a highly profitable side of cloud computing services. My oldest Amazon investment is only up by 430% since January 2017. Still, Amazon only operates in a couple of business sectors. The company (and stock) could be vulnerable to a sudden sea change in cloud computing, possibly led by Microsoft 's (NASDAQ: MSFT) Windows Azure. And how well would Amazon's dominant e-commerce business perform if global rivals such as Alibaba (NYSE: BABA) or MercadoLibre (NASDAQ: MELI) found some traction in the American market? Amazon is not a one-trick pony, but the company should pick up a few more skills before entering this single-stock discussion. Nvidia I'm especially worried about Nvidia's long-term tenacity. The early leader in AI accelerator hardware could very well run into a superior alternative in the next few years. The risk only grows larger if you stretch the timeline out over decades. Rivals like Advanced Micro Devices (NASDAQ: AMD) and Intel (NASDAQ: INTC) control tiny slices of the AI chip opportunity so far, but that could change. The next market-defining AI winner could be some upstart I haven't heard of yet. Moreover, leading cloud computing experts such as Microsoft and Amazon already design AI accelerators of their own, hoping to meet their exact needs at a lower cost. Nvidia's big growth spurt might have a few years left in it. I'm just not convinced that the stock will continue to rise after that. My largest Nvidia purchase has posted a 780% gain since June 2022, but I cashed in on those paper gains and sold most of my Nvidia shares earlier this year. This pony needs to learn a few more tricks, too. Berkshire is the Swiss Army knife of stocks So diversity sets Berkshire apart from the biggest success stories of this era. Sure, Warren Buffett's stock-picking and wealth management expertise deserves tons of respect. But he is also known as a great mentor, and many of Berkshire's top-performing picks in recent years were added by Buffett's lieutenants. I expect the company to continue doing well when the Oracle of Omaha retires at the end of 2025. The stock is kind of like a carefully curated ETF. Berkshire Hathaway owns and operates 68 distinct companies these days. The names range from GEICO car insurance and Duracell batteries to Business Wire information services and the Burlington Northern Santa Fe railroad. Berkshire dabbles in e-commerce (Oriental Trading Company) and clothing (Fruit of the Loom), not to mention home construction (Clayton Homes) and fast food (Dairy Queen). This business list is almost as diverse as the S&P 500 (SNPINDEX: ^GSPC) market index. And that's just Berkshire's in-house brands. The company also owns stock in about 40 public companies. The largest investments include a $60.7 billion stake in Apple (NASDAQ: AAPL), a $45.1 billion position in American Express (NYSE: AXP), and a $28.5 billion holding of Coca-Cola (NYSE: KO). That's consumer electronics, financial services, and beverage distribution. Apple's gigantic presence may look risky, but the danger looks smaller when you also consider Berkshire's epic collection of fully owned businesses. Do you see a theme here? I do, but it's not a single industry. Berkshire is all about diversity, shielding the company and its investors against the temporary ups and downs in any one particular industry. Full disclosure: I don't own Berkshire (yet) I don't actually own any Berkshire Hathaway stock yet. I get my portfolio diversification kicks in other ways, with several dozen hand-picked stocks and a couple of broad index funds serving this purpose. That's arguably a mistake, since Berkshire's stock tends to outperform the S&P 500 in the long run, and I can't compete with the Buffett team's stock-picking skill. So if you're starting a new portfolio today, or just looking for an alternative to the common S&P 500 index funds, you should give Berkshire Hathaway a serious look. It's definitely a safer long-term bet than Nvidia, Netflix, or even Amazon. Should you invest $1,000 in Berkshire Hathaway right now? Before you buy stock in Berkshire Hathaway, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Berkshire Hathaway wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!* Now, it's worth noting Stock Advisor 's total average return is792% — a market-crushing outperformance compared to171%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. American Express is an advertising partner of Motley Fool Money. Anders Bylund has positions in Alibaba Group, Amazon, Intel, Netflix, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Apple, Berkshire Hathaway, Intel, MercadoLibre, Microsoft, Netflix, and Nvidia. The Motley Fool recommends Alibaba Group and recommends the following options: long January 2026 $395 calls on Microsoft, short August 2025 $24 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Globe and Mail
an hour ago
- Globe and Mail
‘There's Still Time to Invest in Snowflake Stock,' Says Five-Star Analyst
Although Snowflake (SNOW) shares have already climbed over 35% this year, UBS believes that the software stock still has more room to grow. Following Snowflake's annual Summit in San Francisco, UBS upgraded the stock from Neutral to Buy and raised its price target from $210 to $265. Despite being late to the upgrade, analysts led by five-star rated Karl Keirstead said that Snowflake's performance has only started improving in the last few quarters, and that the broader AI-related investment cycle is just beginning. Confident Investing Starts Here: Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter Indeed, UBS noted that Snowflake is one of the companies benefiting from the need for 'AI-ready' data, along with Palantir (PLTR) and Databricks. The analysts also pointed out that more software companies like Salesforce (CRM), ServiceNow (NOW), and SAP (SAP) are moving into the data space, which they see as evidence of the growing demand for data. As a result, UBS believes that Snowflake investors haven't fully priced in this growth potential yet and that there's still time to invest before the full AI boom happens. Separately, Morgan Stanley kept its Equal-weight rating and $200 price target despite Snowflake's strengths in data security, ease of use, and multi-cloud capabilities. While the analysts led by five-star rated Keith Weiss praised the company's role in secure AI integration, they remain cautious about the stock's high valuation, which sits at about 55 times the expected free cash flow for 2026. Nevertheless, it is worth mentioning that Snowflake's expansion into data engineering and AI has significantly increased its market opportunity and might justify its premium valuation. Is SNOW a Good Buy Right Now? Overall, analysts have a Strong Buy consensus rating on SNOW stock based on 34 Buys, six Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average SNOW price target of $225.03 per share implies 6.4% upside potential. See more SNOW analyst ratings
