(Benzinga.com) – The S&P 500 gained more than 11% in November, its best November on record. After such a strong month and impressive 2020 rebound off the index’s March lows, much of the easy money from the expected 2021 economic rebound may have already been made.
Bank of America maintains a list of top stock picks selected by its analyst team: the US1 List. Of the 37 stocks on the list, here are the three stocks investors can buy in December that have the most potential upside based on Bank of America’s target prices.
Northrop Grumman Corporation (NYSE: NOC)
Northrop Grumman is one of the largest global defense companies. The stock has been a major market laggard in 2020 and is down 12.1% year-to-date. Yet analyst Ronald Epstein says the market doesn’t appreciate the company’s “best in class” combination of a strong order backlog, earnings growth potential and exposure to high-priority programs.
Northrop’s proven management team, stable cash flow generation and increasing dividends and buybacks should lead to outperformance in the market as the U.S. transitions to a new administration, the analyst said.
Bank of America’s $455 price target represents about 33.4% upside.
Arch Capital Group Ltd. (NASDAQ: ACGL)
Arch Capital is a Bermuda-based company that provides insurance and reinsurance for companies around the world.
Arch shares have also taken a big 23.3% hit in 2020, but analyst Joshua Shanker says the company’s recent struggles with its mortgage business may not be as bad as they seem at first glance. Arch is being forced to reserve against losses in this environment regardless of whether the losses ultimately result in default, the analyst says.
As market conditions improve, Arch can release many of these reserves, and Shanker says he anticipates that will allow the company to beat consensus analyst earnings expectations in coming years.
Bank of America’s $48 price target represents about 31.5% upside.
Wix.Com Ltd (NASDAQ: WIX)
Wix.com operates a simple platform that allows users to design and edit their own websites.
Unlike the other two stocks mentioned, Wix shares are already up 108% year-to-date in 2020 — but analyst Nat Schindler expects that momentum to continue in the near-term.
Schindler has compared Wix to TurboTax in its ability to empower individuals and small businesses to make website design a “do-it-yourself” venture.
As more and more businesses transition online, Schindler says Wix should produce accelerating revenue growth, steady revenue streams and expanding margins.
Bank of America’s $350 price target represents about 26.6% upside.
A Northrop Grumman B-2 Spirit. U.S. Air Force photo.
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