BofA's top 10 Q1 ideas gather precision picks for a volatile quarter
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BofA's top U.S. stock ideas for the first quarter are based on a macro stance that doesn't depart too far from some conventional wisdom lately: Volatility's going to be high, and that means stock picks need to be selective.

The bank's year-end 2022 target for the S&P 500 is 4,600 - about 4% lower than where it is today - driven by a "higher discount rate, U.S. GDP primacy vs. China, rising capex but slowing consumption, and the end of the 'equity shrinkage' bull case."
Volatility brings "potential opportunities" but calls for a more precise approach, BofA Global Research says.
"Our strategy team is bullish on capex, cautious on consumption, and recommends companies with strong free cash flow and inflation-protected yields," the bank says.
That leads it to 10 high-conviction ideas for Q1, nine of which are bullish: Buy ratings on Citigroup (NYSE:C), Carrier (NYSE:CARR), CNH Industrial (NYSE:CNHI), CrowdStrike (NASDAQ:CRWD), Lamb Weston Holdings (NYSE:LW), Occidental (NYSE:OXY), Rexford (NYSE:REXR), ViacomCBS (VIAC, VIACA) and Xcel Energy (NASDAQ:XEL).
Some of its biggest upside potential is seen in ViacomCBS (NASDAQ:VIAC), where a recent pullback makes for attractive risk/reward and a bull case "largely predicated on the recent wave of industry consolidation" - such as Discovery/Warner Bros., Amazon and MGM Studios, etc.
"Given VIACâs market positioning, they would be an attractive candidate with several assets that can command a premium for the right buyer," BofA says. But meanwhile, ad trends look healthy and streaming performance is tracking better than BofA's early 2021 predictions. An investor day in mid-February should provide more streaming detail after some early February Q4 earnings
It also sees big potential in Citigroup (C), where a $100 target implies 58% upside. Citi's at an "inflection point" after a decade of disappointing returns, BofA says, with the stock at 0.8x tangible book value and a price/earnings ratio under 8 - nearly half the multiples of peers.
One positive there, BofA says, is new CEO Jane Fraser, who "appears to be operating with a sense of urgency to right size the franchise (announced exit from consumer banking in 13 countries) and to address regulatory concerns (tied to risk controls)."
Another high-upside pick is CrowdStrike (CRWD), where the bank's $315 target implies 59% upside. Shares have fallen some 30% from a Nov. 9 peak, but the company still faces a "vast" market opportunity and a still-growing total addressable market by introducing new modules, along with delivering better-than-expected results.
BofA sees 51% upside in Occidental (OXY), with a $47 price target on "the most capital efficient U.S. E&P, with the lowest per-barrel sustaining capital of its peers." Despite a hangover from the debt-fueled acquisition of Anadarko, Oxy's free cash flow has enabled "significant" deleveraging and the signaled intent to reset a competitive dividend. "Returning cash to shareholders has been one missing link in OXYâs investment case that we expect to be addressed in the year ahead while continuing to transfer value from debt to equity through continued rebalancing of its capital structure," BofA says.
Out of its top 10 ideas, BofA does have one Underperform to counter the Buys: It sees 21% downside from yesterday's close in AutoZone (NYSE:AZO) due to decelerating demand for do-it-yourself auto maintenance.