Bank of America unveiled a slew of stocks this week that they believe offer investors’ a compelling entry point. The firm says these companies are attractive in the current environment and are poised for more long-term share gains. CNBC Pro combed through top Bank of America research to find the most undervalued stocks on Wall Street. They include: The Hartford , McKesson, Harley-Davidson, KKR and Sanofi. McKesson If there’s a pullback in shares of the pharmaceutical and health tech distributor, investors should buy the stock, Bank of America says. “Pullbacks have been profitable, keep them on your radar,” analyst Michael Cherny says. Meanwhile, shares of the company are down almost 2.8% this year. Cherny likes the stock’s consistent growth and says it’s a simple “straightforward, resilient growth story.” The balance sheet is robust, too and shareholders really should just overlook any volatility, the firm says. “We primarily attribute multi-day, downward moves in shares to shifts in investor positioning and/or factor appetite much more than a shift in investor sentiment,” he added. The firm says its base case is that the already “undervalued” stock can re-rate from current levels. “Numerous opportunities for upside,” he went on to say. Harley-Davidson Shares of the company are up almost 15% this year, but the stock is still very attractive, analyst Robert Ohmes said recently. Harley is coming off a solid fourth quarter earnings report with a beat on the top and bottom line earlier this month and more upside is warranted, according to the firm. Ohmes has the stock as one of its top picks this year and for good reason, he says. Investors don’t fully appreciate the company’s “undervalued transformation,” that Harley has gone through according to Ohmes. In addition, Harley’s management team is executing well with electric vehicle motorcycles on the horizon and burgeoning international growth opportunities. “We see continued gross margin expansion for HOG in 2023 as profitability per unit should continue to improve on pricing more than offsetting raw material inflation, reduced cost structure, & lower logistics costs,” he said. Taken together, Harley is firing on all cylinders and “EPS upside,” is on the horizon, Ohmes says. KKR Shares of the alternative asset and private equity firm have more room to run, analyst Craig Siegenthaler says. In a recent note to clients, the firm named several reasons why it sees the stock as compelling. Siegenthaler cited valuation calling the stock “undervalued” as well as “growth – reacceleration in 2023-24” and improving sentiment. The says it sees “asymmetrical upside potential” meaning that when peers in the sector go up, KKR shares could go even higher. Meanwhile, the company has a “differentiated” business model that Siegenthaler sees as underappreciated. “KKR’s business is now highly diversified with robust scaling opportunities in multiple verticals, broadly strong investment performance, core competency in product innovation and a best-in-class APAC privates franchise. The stock is up almost 4% this month and Siegenthaler recently raised his price target to $70 per share from $60. “Still bullish on KKR,” he quipped. The Hartford “HIG stock has historically traded at a discount to peers, although a recent bid from competitor Chubb narrowed the discount and likely improved the valuation off trough. Given a higher-than-peer earnings outlook, we believe the stock undervalued. Overhangs from a shrinking personal lines business and ongoing business interruption litigation, seem more than offset by the earnings power and the potential courtship by an acquirer.” Sanofi We forecast return 12-13% growth in 24E/25E and 24-27E EPS CAGR 8% with no further large LOE (loss of exclusivity) this decade. Remain Buy for undervalued growth and pipeline with two launches worth 5bn euros peak in 23E. … .Pipeline overlooked with two launches with cEur5bn sales potential in 23E; and improving mid/early immunology pipeline. … .Valuation undervalues Dupixent growth, improving pipeline and new management driving improved cost focus, pipeline growth, improved capital allocation and communication > ” KKR “Still bullish on KKR after recent run. … .Stock attractive due to asymmetrical upside potential. … .Attractive entry point for KKR due to 4 factors: valuation – undervalued, growth – reacceleration in 2023-24, income statement – asymmetric upside, sentiment – mixed but improving. … .KKR’s business is now highly diversified with robust scaling opportunities in multiple verticals broadly strong investment performance, core competency in product innovation, a best-in-class APAC privates franchise. … .KKR has a differentiated business model with a large balance sheet & a sizable capital markets business. Harley- Davidson Undervalued Leisure Brand/Retailer. … .See underappreciated transformation Brands/Retailers with compelling. … .We see continued gross margin expansion for HOG in 2023 as profitability per unit should continue to improve on pricing more than offsetting raw material inflation, reduced cost structure, & lower logistics costs. … .We believe HOG should trade more in line with its historical multiple of 10-15x given: potential EPS upside on new model dealer restocking and favorable Financial Services segment.” McKesson Numerous opportunities for upside on core stock. Pullbacks have been profitable, keep them on your radar. … .Despite a straightforward, resilient growth story, McKesson’s stock has had numerous selloffs since the start of 2022. … .We primarily attribute multi-day, downward moves in shares to shifts in investor positioning and/or factor appetite much more than a shift in investor sentiment. … .Looking back, MCK’s selloffs have served as profitable buying opportunities, as the dislocations have offered consistent discounts to what we already see as an undervalued stock.”
