Bank of America: You should own these shares in the third quarter

So far this year, the S&P 500 is up about 16 percent. Bank of America has come up with updated recommendations for the short-term investor looking a quarter forward.

“Bank of America’s macro outlook has evolved over the most recent quarter,” strategist Anthony Casamassino wrote in a note Monday.

US stock expert Savita Subramanian recently announced that the bear market is over. At the same time, Michael Hartnett maintains his negative view of the stock market. In addition, another economist with the company, Michael Jabin, has moved on his recession claim, and expects a moderate decline next year.

Bank of America compiled its top 10 ideas for the new quarter, all with buy recommendations, and here are five of them:

Bath & Body Works sells light and personal products and is noted as a Reasonably Valued Consistent Growth Company. The company is growing and gaining market shares in all categories and the bank sees many growth drivers in the future. They also expect better profit margins when cost inflation and freight costs normalize.

In the technology field, Bank of America mentions the software company Datadog. They believe that the demand for services is good and that the company will benefit from developments in artificial intelligence.

Potato producer Lamb Weston is another stock on the list. Bank of America notes that restaurant demand, which makes up about 85 percent of the company’s sales, was resilient from March to May, even as prices increased through its restaurant and retail channels in May. The bank’s analysts expect Lamb Weston to beat earnings expectations when the company reports its results on July 25th.

Disney stock is up 4 percent in 2023, far weaker than the S&P 500. Bank of America highlights that there remains strong demand in theme parks and an increased focus on quality and content spending. Their price target of $135 per share is more than 50 percent above Friday’s close.

Bank of America believes Wells Fargo is one of the banking stocks with the best risk/return. Last week’s regulatory stress tests, coupled with the fact that they are very strong, mean that “the bank will be able to return excess liquidity to shareholders in the form of buybacks or dividends.” Plus the fact that the bank is in a better position to be able to handle changing regulatory capital requirements (an expected proposal from the Fed will come in mid-July).