There’s a lot of bullishness about 2025 – and not just because of the 23% gain in the S&P 500 in this outgoing year. Polling has shown a high level of public confidence that the incoming Trump administration will implement pro-business policies, including deregulation and tax cuts, which are anticipated to further stimulate economic growth.
Savita Subramanian, head of US equity strategy at Bank of America, has been closely monitoring the situation. On the macro picture, Subramanian aligns with BofA’s S&P 500 target of 6,666 for 2025, which represents about a 13% increase from current levels. Translating her optimism into actionable advice, Subramanian recommends that investors focus on large-cap value stocks.
“Think about what’s in large-cap value. It’s big regulated companies that are going to get a break under a regulatory light administration,” Subramanian opined.
The stock analysts at Bank of America are following this reasoning, highlighting such stocks as their top picks for 2025. We’ll take a closer look at two of these stocks. They’re undeniably large-cap equities, and, according to the TipRanks database, they carry ‘Strong Buy’ ratings from the Street’s consensus. Let’s delve into the details and uncover why BofA considers them top picks for the new year.
AT&T (T)
Up first is AT&T, a true blue-chip stalwart in the market, a legacy name in the US telecom industry, and one of the world’s most iconic brands. As one of the three largest wireless providers in the US, AT&T boasts a market cap of $162 billion, placing it firmly in the large-cap category and ranking it as the fourth-largest telecom company worldwide. This year, AT&T has also rewarded investors, with the stock rising nearly 36%.
The strong gains in this telecom stock have been bolstered by increases in subscriber numbers. In its last reported quarter, 3Q24, AT&T reported a net gain of 226,000 fiber subscribers, marking 19 quarters in a row with 200,000-plus net fiber adds. This was complemented by strong gains in postpaid phone customers, which totaled 403,000 net adds.
Overall, AT&T delivered mixed results on both the top and bottom lines in Q3. The company reported revenue of $30.2 billion, falling short of forecasts by $250 million. Earnings, however, outperformed expectations, with AT&T’s non-GAAP EPS of 60 cents for Q3 exceeding projections by 3 cents per share. Additionally, the company generated $5.1 billion in free cash flow during the quarter.
