Savita Subramanian, the head of equity and quantitative strategies, has been one of the voices at Bank of America that we have followed for years at 24/7 Wall St.. She and her team have determined in a new research report that the current Nifty Fifty, which are the 50 largest market capitalization companies in the Standard& Poor’s 500, could be in for some rough sailing. The term “Nifty Fifty” refers to a group of roughly 50 large-cap U.S. stocks that were popular among institutional investors during the 1960s and 1970s. These were considered “one-decision” stocks, meaning investors were encouraged to buy and hold them indefinitely due to their strong growth prospects and high price-to-earnings ratios. The last big run of the “Nifty Fifty” was in the 1990s and was the precursor to the dot.com tech bubble.
24/7 Wall St. Key Points
The price to earnings ratio on a trailing basis for the S&P 500 is 25.90. While down from last quarter, on a historical basis it’s very high.
The Bank of America team feels the dominanace of Mega-Cap giants may soon be over.
It may be time to look at low PE laggards that could have some big upside in the coming months and years.
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Ms. Subramanian and her team noted that the run of the current Nifty Fifty may be closer to the end than the beginning and stated this in the report:
Today’s Nifty 50 is lower quality than most of the 1990s, sports average long-term growth expectations despite near record valuations. Tech is not the culprit – our sector-neutral and ex-Tech valuation analyses indicate a love for large. But the run may be done. A September Fed rate cut is largely priced in, even after the recent PPI, which bolsters our in-house view that there are upside risks to inflation. Easing has been accompanied by Mega caps lagging more than leading, and higher Inflation should support a broadening of the S&P 500 beyond defensives/secular growth.
They also noted that the regime indicator suggests that change is underway in the economy.
In July, the US Regime Indicator had its most significant jump in over a year. August’s continued improvement is early confirmation of a change from Downturn to Recovery (two months make it official). History would suggest there is more to go in cap-weighted dominance. But if the Fed’s next move is a rate cut, and if the Regime indicator is shifting to a Recovery, we think the run may be closer to done.
The Bank of America team presented a screen of inexpensive S&P 500 companies (forward P/E below the index median) with high beta (above index median) and smaller market cap (below index median) rated BUY by BofA Global Research analysts. We screened the list for the top-paying dividend stocks. We found five that are offering tremendous value and reliable payouts to shareholders, and are outstanding ideas for growth and income investors now.
Why do we cover Bank of America Value/Dividend stocks?
Dividend-paying value stocks are generally companies that trade at a price lower than their fundamental value or what their performance suggests they should be worth. Typically, these are shares of a company with solid fundamentals that are priced below those of its peers, based on an analysis of the price-to-earnings ratio, yield, price-to-book value, and other relevant factors. Value stocks are often overlooked by the market or undervalued due to factors such as market volatility, economic downturns, or negative news surrounding the company, which may be temporary.
BXP
Formerly known as Boston Properties, and trading at a puny 9.3 times estimated forward earnings, this company could be a core REIT holding for years. BXP Inc. (NYSE: BXP) is a fully integrated, self-administered, and self-managed real estate investment trust. The Company develops, owns, and manages premier workplaces in the United States, and the segments by geographic area are:
Boston
Los Angeles
New York
San Francisco
Seattle, and
Washington, DC.
Its segments by property type include Office (which includes office, life sciences, and retail), Residential, and Hotel.
BXP’s portfolio totals 53.0 million square feet and 184 properties, including nine properties under construction/redevelopment.
Its properties consist of 162 office and life sciences properties (including seven properties under construction/redevelopment); 14 retail properties (including one property under construction); seven residential properties (including two properties under construction), and one hotel.
The company’s properties include:
Times Square Tower
100 Federal Street
767 Fifth Avenue
601 Lexington Avenue
Atlantic Wharf Office Building
343 Madison Avenue
The Bank of America price target for the shares is posted at $
Devon Energy
Down nearly 26% from its 52-week high, and trading at 8 times forward earnings, this S&P 500 energy stock has been impacted by volatility in oil and gas prices, despite its attractive dividend policy, which includes a fixed dividend that has more than doubled since 2021, as well as a variable dividend component. Devon Energy Corporation (NYSE: DVN) is an oil and gas producer in the United States with a diversified multi-basin portfolio headlined by an acreage position in the Delaware Basin. The Company is primarily engaged in the exploration, development, and production of oil, natural gas, and natural gas liquids (NGLs).
It owns a portfolio of assets located in the:
Delaware Basin,
Rockies
Eagle Ford
Anadarko Basin
The Delaware Basin operates in southeast New Mexico and across the state line into west Texas. It offers exploration and development opportunities from many geologic reservoirs and play types, including the oil-rich Wolfcamp, Bone Spring, Avalon, and Delaware formations.
The company’s Rockies development consists of its Williston Basin and Powder River Basin assets.
The Eagle Ford operations are located in Texas’s DeWitt and Karnes counties.
The Anadarko Basin development is located in western Oklahoma. It has a joint venture with Dow to develop a portion of its acreage in the Anadarko Basin.
Bank of America’s target price for the shares is set at $45.
Eastman Chemical
With a rich dividend and trading at the lower end of the 52-week range at 9.3 times forward earnings, this is a perfect stock for growth and income investors looking for value. Eastman Chemical Company (NYSE: EMN) is a global specialty materials company that produces a range of products found in items people use every day.
Its segments include:
Advanced Materials (AM)
Additives & Functional Products (AFP)
Chemical Intermediates (CI)
Fibers
The AM segment produces and markets polymers, films, and plastics with differentiated performance properties for value-added end-uses in transportation, durables and electronics, building and construction, medical and pharma, and consumables end-markets.
AFP segment manufactures materials for products in:
Food, feed, and agriculture
Transportation
Water treatment and energy
Personal care and wellness
Building and construction
Consumables and durables
Electronics end-markets
The CI segment sells intermediates for end-markets, such as industrial chemicals and processing, building and construction, health and wellness, and food and feed.
The Fibers segment manufactures and sells acetate tow and triacetin plasticizers.
The Bank of America price target is $78.
Host Hotels & Resorts
This stock will stay in demand if travel continues to pick up in 2025 and beyond, and investors will enjoy a rich dividend along the way. Host Hotels & Resorts, Inc. (NASDAQ: HST) is an S&P 500 company, the largest lodging real estate investment trust, and one of the largest owners of luxury and upper-upscale hotels. Trading at 8.1 times forward earnings, it is a solid total return idea now.
The Company owns 76 properties in the United States and five internationally, totaling approximately 43,400 rooms. It also holds non-controlling interests in seven domestic and one international joint venture. A disciplined approach to capital allocation and aggressive asset management guides the company.
Host Hotels & Resorts partners with premium brands such as:
Marriott
Ritz-Carlton
Westin
Sheraton
W
St. Regis
The Luxury Collection
Hyatt
Fairmont
1 Hotels
Hilton
Four Seasons
Swissôtel
ibis
Bank of America has set a $18 target price objective.
Healthpeak Properties
This leading company invests in real estate related to the healthcare industry, including senior housing, life science, and medical offices. The shares have lagged peers in 2025 due to lower-than-expected rent increases compared to other REITs. It currently trades at a 40% discount to its fair value, and at nine times forward earnings estimates. Healthpeak Properties, Inc. (NYSE: DOC) is a fully integrated real estate investment trust (REIT).
The Company acquires, develops, owns, leases, and manages healthcare real estate across the United States. It owns, operates, and develops real estate focused on healthcare discovery and delivery.
Healthpeak Properties segments include:
Lab
Outpatient medical
Continuing care retirement community (CCRC).
The Outpatient medical segment owns, operates, and develops outpatient medical buildings, hospitals, and lab buildings.
The lab segment properties contain laboratory and office space, and are leased primarily to:
Biotechnology
Medical device and pharmaceutical companies
Scientific research institutions
Government agencies
Organizations involved in the life science industry
Its CCRC segment is a retirement community that offers independent living, assisted living, memory care, and skilled nursing units, providing a continuum of care within an integrated campus.
Bank of America has a $23 target price.
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The post Bank of America Says Nifty Fifty In Trouble – 5 Low PE Dividend Strong Buy Bargains appeared first on 24/7 Wall St..
