In a dynamic market increasingly dominated by artificial intelligence (AI) narratives, Bank of America's analysts have curated a list of 16 compelling stock recommendations. These selections are specifically geared towards investors aiming to diversify their portfolios beyond the AI trend, mitigating risks associated with a potential market bubble in technology. The chosen companies exhibit characteristics of being undervalued, possessing upwardly revised profit forecasts over the past quarter, trading at lower multiples than the general market, and maintaining at least a 10% discount from their peak 52-week valuations.
Amidst a recent downturn in technology stocks, as investors reallocate capital towards assets with reduced AI exposure, Bank of America's insights offer a timely alternative. This strategic shift comes at a crucial juncture, particularly as major U.S. indices reached unprecedented levels earlier in the year, fueled largely by the AI boom.
Among the highlighted stocks are several entities well-recognized by American consumers. This category includes the telecommunications giant AT&T, media and entertainment conglomerate Walt Disney Co., discount retailer Dollar General, and the luxury cruise line operator Viking Holdings. These companies represent sectors that, while not directly tied to AI, offer robust business models and potential for growth.
Disney, fresh off its fiscal fourth-quarter earnings report, is projected to see growth driven by its robust sports offerings and its experiences division, encompassing its popular theme parks. AT&T also shows promise, having recently surpassed subscriber growth expectations in its latest financial disclosures. Viking distinguishes itself through its unique, all-inclusive, and destination-focused cruise experiences, leading to superior financial outcomes. Meanwhile, Dollar General is well-positioned to benefit from consumers seeking greater value amidst inflationary pressures, a phenomenon known as "trading down."
The Bank of America list further extends to include household product manufacturer Church & Dwight, known for brands like Arm & Hammer, and McCormick & Co., a prominent spice and packaged food producer. Shopping center operator Regency Centers Corp also made the cut, indicating a belief in the resilience of brick-and-mortar retail and consumer staples.
Beyond consumer-facing companies, the analysts identified opportunities within the financial and logistics sectors. KeyCorp, a significant financial services company, and Progressive, a leading insurance provider, are noted for their potential. Progressive, in particular, has seen some of the most optimistic revisions to its earnings per share estimates, with analysts suggesting future quarter and even 2027 forecasts may still be understated. BGC Group, a brokerage and fintech firm, commands a strong position in energy derivatives. Concurrently, J.B. Hunt Transport Services is recognized for its successful cost-reduction strategies that are beginning to yield positive results.
The bank's recommendations also venture into industrial and energy sectors, featuring natural gas and energy utilities such as Eversource Energy and Oneok. Mining behemoth Freeport-McMoRan is anticipated to recover following an operational accident and subsequent outage at one of its facilities. Packaging solutions provider Amcor is cited for its undervalued upside potential, bolstered by a recent acquisition and a new chief financial officer appointment. Finally, dental and medical products manufacturer Henry Schein completes this diverse list, signaling confidence in the healthcare supply chain.