3 Stocks To Watch From Wells Fargo’s New “Signature Picks” List

May
4, 2021

4 min read

This story originally appeared on MarketBeat

3 Stocks To Watch From Wells Fargo’s New “Signature Picks” List

The start of a new month is never a bad time to revisit your portfolio and see if there are any changes to be made. With the major indices currently trading around all-time highs, there’s definitely a prevailing risk-on sentiment in equity markets, even as many of the tech titans that led last year’s rally take an extended breather. 

It looks like the folks over at Wells Fargo share this feeling, as they published what’s being called their “Signature Picks” list yesterday. It’s a portfolio of 35 stocks, with an average expected return of 15%, and with a general focus on those with existing momentum. There were four criteria for inclusion; an attractive risk/reward profile over the coming year, existing ratings of Overweight and High Conviction by Wells Fargo’s analysts, they must pass a peer review by the list’s committee, and they must have a six-month average daily trading volume of at least $5 million. 

In a note to clients, they introduced it as a portfolio that will “be more risky and more aggressively positioned than our former QQP model portfolio, which concentrated on defense first and offense second. However, Signature Picks on occasion will take a more risk-averse stance based on internal metrics and fundamental stock outlooks.” With that in mind, let’s take a closer look at 3 stocks from the list that look particularly appetizing at current prices. 

Norfolk Southern Railway (NYSE:NSC)

Shares of NSC have barely taken a breather since their current rally started around this time last year. Whereas most of last year’s leaders saw some heavy selling this past February, NSC went into that month close to an all time high and left it close to an even higher all time high. Since then they’ve continued their march northwards and are up about 90% in the past twelve months. 

Their Q1 report last week showed a revenue engine that’s ticking over nicely, as the company set a quarterly record for its EPS, its income, and its operating ratio. According to Wells Fargo, investors can expect more of the same and the $315 price target that’s been slapped onto them suggests upside of more than 10% from Monday’s closing price. 

Johnson & Johnson (NYSE:JNJ)

JNJ will be a familiar ticker to many investors at this point, due in large part to their COVID vaccine being used as part of the global rollout. Having recovered all of the ground lost to the COVID led crash within a month last year, shares traded largely sideways until late November. But since then they’ve been ticking upwards and Wells Fargo sees this trend continuing. 

For a $400 billion pharma behemoth, JNJ is well able to outperform expectations and last month’s earnings report comfortably beat those of the analysts on both the topline and bottom-line numbers. The same report also showed management increasing their full year guidance, an uber-bullish signal that surely played a part in their inclusion on this list. 

Bank of America (NYSE:BAC)

With a 130% rally notched since March of last year, shares of BAC are without a doubt among the best performing of the big banks right now. The higher rate environment that we’re starting to see evolve is doing them no harm at all, with the stock up 40% in the past three months alone. 

For those of us on the sidelines, however, there’s every reason to expect the rally to continue and there’s plenty of room still onboard. Wells Fargo sees shares hitting $48 this year, which suggests an upside of at least another 20% from current levels, and it’s hard to see that number not being hit with the current pace. 

A comfortable beat on analyst expectations in April’s Q1 earnings ticked the box for most of Wall Street, while a juicy dividend yield of 1.8% should keep most impatient investors happy while the rally plays out, and BAC shares continue setting decade highs.

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