3 Stocks Bank of America Analysts Just Upgraded and Why

Key Points

• Bank of America analysts landed on a common theme as they looked for the three stocks to boost recently, a theme that investors can get behind today.
• With a fundamental story behind them, these stocks now call for double-digit upside.
• They have even attracted some institutional capital and have sent some bearish traders running back.

Retail investors typically rely on online information to start picking their next investments for their portfolios. However, there is a subtle way to align new capital to the trends that Wall Street analysts notice right now. The benefit is that investors don’t have to do the hours of in-depth analysis needed to come to a conclusion for a stock pick but rather connect the dots behind recent analyst ratings.

To do this, investors must pick one reputable source, such as a specific analyst or investment bank. That is why today's focus is on the three stocks that Bank of America Co. NYSE: BAC analysts decided to upgrade relatively consecutively. There must be a broader trend in the background to get them behind these three stocks at the same time.

When successfully connecting the dots and reverse-engineering what these analysts might be looking at, investors can tap into a gold mine of further investment ideas for the future. On that note, stocks like Airbnb Inc. NASDAQ: ABNB, Hershey Co. NYSE: HSY, and even Dollar General Co. NYSE: DG landed on the list of recent boosts for Bank of America analysts today.

Inflation Themes and Property Prices Boost Airbnb Stock’s Value Proposition

Even after the Federal Reserve (the Fed) 's interest rate hike cycle, average property prices in the United States were still up to 32% above the pre-COVID period. The market got so hot that even after pivoting into an easing and rate-cutting cycle over the past six months, the property market seems to be out of reach for many consumers.

This is why the mortgage market index is still down to a 1996 low, meaning that lowering yields have yet to have the desired effect on mortgage demand. This is good for Airbnb stock because of the flexibility and diversity it offers to consumers looking to wait the market out.

By renting through " long-term stays” on the platform, consumers can avoid rising rent prices and wait for the market to offer them a better price on a house that they want to buy. This trend manifests itself in the company’s key performance indicators (KPIs) as of the last quarter.

Bookings of nights and experiences grew by 8% over the past 12 months, driving further revenue growth for the platform and showing how the business model is attractive today. This growth has helped Airbnb increase its free cash flow to $1.4 billion for the quarter, and it is only forecasted to keep growing.

Knowing this, investors shouldn’t be surprised to see analysts at Bank of America place a $159 price target on the stock, up from their previous valuation of $154. As this new valuation came as recently as December 2024, investors have a fresh opinion of a potential 18.5% upside from where the stock trades today.

Inflation Pressures Could Help Hershey Stock’s Defensive Nature

Hershey offers affordable products in the consumer staples sector, and this defensive nature has kept a lot of the price action away from the stock, as there are hotter stocks in the market today calling for more attention. However, Bank of America analysts decided to express their bullish opinion for the name as of December 2024.

With a $180 a share valuation, these analysts see a 6% upside from where the stock trades today, which might be on the low end, considering that a potential takeover buyer is in the block looking to buy Hershey for much more than $180 a share.

The first offer that came through for Hershey stock didn’t impress management, as it was too cheap. This article will walk investors through the takeover offer and where a more acceptable price might be. In short, it is closer to the stock’s all-time high of approximately $275.

Bears know that this could be next for Hershey stock, which is why investors can notice a 5.7% decline in the company’s short interest for the past month alone. This is a sign of bearish capitulation in face of the coming bullish factors in Hershey.

Dollar General Stock, a Double-Digit Upside Opportunity

Investors can now see a trend here, where inflation in the real estate sector has pushed more growth and upside in Airbnb, and how this inflation keeps defensive names on the backburner (like Hershey's stock). This theme extends to the ultimate value proposition for consumers during a higher inflation setting.

Dollar General stock commands a $95 price target from Bank of America analysts as of December 2024, which implies a 24.3% upside from its current price. These analysts weren’t the only ones willing to express their optimistic view, though, as those from Principal Financial Group boosted their holdings in the company recently.

A 2.6% boost as of December 2024 brought the group’s position in Dollar General stock to a high of $21 million, another sign of bullishness that investors should consider moving forward.