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Key Takeaways
- Bank of America analysts compiled a group of 16 stock picks for investors looking to find value outside of the AI trade amid growing worries about a bubble.
- The list includes AT&T, Disney, Dollar General, KeyCorp, Progressive, and cruise operator Viking.
If you’re looking to diversify your stock portfolio away from AI, Bank of America has some suggestions.
In a note to clients this week, the analysts listed 16 stock picks that aren’t generally considered direct AI beneficiaries—and that they believe could be undervalued, leaving room for growth. Their ideas aren’t included in AI-related exchange-traded funds, the analysts said; have had their profit estimates raised in the last three months; trade below the broader market’s multiple, and are trading at least 10% below their own 52-week highs.
Here are some of their ideas.
Why This Matters to Investors
Tech stocks have pulled back in recent weeks, as investors rotate into stocks with less exposure to the AI trade, amid concerns about elevated valuations after a big run-up earlier this year that helped push the major U.S. indexes to record highs.
Consumer-Focused, Well-Known Names
Some are companies that are likely familiar to American consumers, including telecommunications giant AT&T (T), Walt Disney Co. (DIS), Dollar General (DG), and cruise operator Viking Holdings (VIK).
Disney, which reported fiscal fourth-quarter results on Thursday, could be poised for growth from its sports offerings and experiences segment, which includes its theme parks, the analysts said. AT&T could have several levers of growth, they wrote, after the company topped phone subscriber estimates in its most recent report.
Viking’s “differentiated, all-inclusive, destination focused product continues to set it apart from peers, driving superior financial performance,” they said. Dollar General, meanwhile, stands to see its performance improve as consumers pressed by inflation “trade down” and look for value, according to BofA.
Church & Dwight (CHD), maker of home brands like Arm & Hammer and Oxi-Clean, spice and packaged food maker McCormick & Co. (MKC), and shopping center operator Regency Centers Corp (REG) were also on BofA’s list.
Finance and Logistics Stocks
Several finance and logistics firms, like KeyCorp (KEY) and insurance giant Progressive (PGR), were on the list.
Progressive’s earnings per share estimates have had some of the strongest positive revisions on the market, the analysts said. They believe that estimates for upcoming quarters and into 2027 are likely not optimistic enough.
BGC Group (BGC), a brokerage and fintech company, holds a “dominant position” in energy derivatives, the analysts wrote. J.B. Hunt Transport Services’ (JBHT) cost-cutting efforts, meanwhile, are “bearing fruit,” according to the analysts.
Industrial and Energy Stocks
The analysts identified several natural gas and energy-related stocks, like Eversource Energy (ES) and Oneok (OKE), along with mining giant Freeport-McMoRan (FCX), shares of which the analysts expect to recover after an accident and outage at one of its mines.
The list also included industrial firms like packaging products maker Amcor (AMCR), which the analysts said “offers undervalued upside potential” following a recent acquisition and the appointment of a new chief financial officer.
Dental and medical products manufacturer Henry Schein (HSIC) rounded out the list.
