Top 10 Stock Picks For 2013 By Bank Of America/Merrill Lynch Vs. Street View

Includes: C, CSCO, CTL, ES, F, LLY, MMM, MOS, VLO, WMT
by: Richard Shaw

According to Business Insider, Bank Of America / Merrill Lynch has identified these 10 stocks as their top picks for 2013:

  • Ford (NYSE:F)
  • Wal-Mart (NYSE:WMT)
  • Valero (NYSE:VLO)
  • Citigroup (NYSE:C)
  • Lilly (NYSE:LLY)
  • 3M (NYSE:MMM)
  • Cisco (NASDAQ:CSCO)
  • Mosaic (NYSE:MOS)
  • CenturyLink (NYSE:CTL)
  • Northeast Utilities (NU)

Some of the picks are in line with consensus views, but a few tilt significantly against the consensus.

Savita Subramanian is the head of the equity and quant strategy group at BoAML, which developed the list.

She was fairly accurate in her prediction last December for the S&P 500 to end 2012 at 1450. For 2013, she is predicting the S&P 500 will end at 1600.

According to CNBC, she said; "We are pretty unapologetically bullish for 2013. We think that a new high here for the market is not a very outlandish expectation."

Figure 1: Top Picks BoAML Target Price vs Market Price

The earnings growth rates for the top picks vary widely from near zero to near 78%. The target prices range from 12% to 78% more than current prices.

Figure 2: Top Picks Average Street Analyst Target Price vs. Market Price

The average Street analyst target price ranges from 8% to 30% more than the current market price, but when yield is added, the range is 11% to 32% above the current market price.

Figure 3: Top Picks S&P Current Fair Value vs Market Price

The current fair value of the top picks according to Standard & Poor's are from 17% less than the current market price, to 35% above the current market price.

Figure 4: Top Picks vs S&P and Thomson Reuters StarMine Analyst Ratings

The StarMine (most accurate analysts per sector) ratings range from SELL (2) to STRONG BUY (9.7).

S&P earnings and dividend quality ranges from B- to A+.

S&P Stars (year ahead relative performance) ranges from MARKET PERFORM (3) to BUY (5).

The S&P Fair Value rankings range from MOST OVERVALUED (1) to MOST UNDERVALUED (5).

Disclosure: QVM has no positions in any stock mentioned as of the creation date of this article (December 14, 2012), but does have an options position in CSCO. We certify that except as cited herein, this is our work product. We received no compensation or other inducement from any party to produce this article, but are compensated retroactively by Seeking Alpha based on readership of this specific article.

General Disclaimer: This article provides opinions and information, but does not contain recommendations or personal investment advice to any specific person for any particular purpose. Do your own research or obtain suitable personal advice. You are responsible for your own investment decisions. This article is presented subject to our full disclaimer found on the QVM site available here.