Barlow’s Research Roundup: BofA’s top ten U.S. stock picks for growth and value

Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

Top tens

BofA Securities U.S. equity and quant strategist Savita Subramanian updated her top 10 U.S. stock picks for growth and value investors. The growth list saw one change – Palo Alto Networks was replaced by fund manager Ares Management LP. There are no changes to the value list. Over the past 12 months both lists have easily beat their respective benchmarks. The growth list’s 43.6 per cent return beat the S&P Growth index’s 25.7 per cent by a big margin and the value list’ s 41.9 per cent 12-month appreciation outdistanced the S&P value’s 18.4 per cent.

The growth stocks are Allstate Corp., AppLovin, Ares Management Corp, Axon Ent Inc, Meta Platforms, Merck, TKO Group, Take-Two Vistra and Welltower. The value stocks are Arch Capital, Aflac, Allstate Corp., Everest Group Ltd, Edison Intl, MetLife, Merck, Nucor, Synchrony Financial and U.S. Bancorp

”Massive capital destruction”

Jefferies strategist Christopher Wood’s renowned GREED & fear report outlined the indicators that would predict the end of the AI investment bubble,

“There is no doubt that markets remain hyper-focused on the AI capex cycle and how it might end. GREED & fear’s base case, as discussed here last week , is that the cycle is most likely to end in the US when investors suddenly focus on the lack of returns from the continuing massive spending which amounts to an equally massive transfer of wealth from the hyperscalers’ balance sheets to North Asia, as reflected in the increased capitalisations of the Korean and Taiwanese stock markets. The combined stock market capitalisations of Korea and Taiwan have more than tripled from US$3.2tn at the start of 2023 when the AI story kicked off in stock markets to US$9.8tn, according to Bloomberg . This is why, in GREED & fear’s view, a key chart to monitor going forward is the relative performance of the hyperscalers in the context of the S&P500 … The four major US hyperscalers have issued US$144bn worth of bonds so far this year, compared with US$83bn in 2025 … GREED & fear’s longstanding prediction is massive capital destruction, or what Austrian economists like to call “malinvestment”, for the hyperscalers, or at least for most of them.

ETF outflow

Wells Fargo strategist Ohsung Kwon reported big outflows from U.S. equity ETFs,

“SPX saw $12B of ETF outflows, the largest outflows YTD. NDX -$7B, RTY -$1B. Tech led outflows … US flows trailed int’l, the first time since the Iran war int’l flows into US equities continued … Over the past week, CTAs [commodity trading advisor, usually algorithmic trading] sold $5B of global equities, led by Europe (-$8B) … : CTAs sold front-end USTs and bought 30Y last week, but remain net short overall. Our model suggests front-end selling in most scenarios … CTAs remain long oil but would sell in all scenarios. In metals, CTAs are short precious metals, and would continue to sell across all scenarios”

Bluesky post of the day

Diversion

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