We are seeing a weird dichotomy between the health of the US consumer and the weakness in the industrial sector, observes Briton Ryle, editor of The Wealth Advisory.
The big takeaway from this observation is that the consumer is a more important indicator than manufacturing.
And at some point, the consumer will become the antidote to the recession talk that weak manufacturing data is encouraging. What does this mean, exactly?
Well, it means that we should focus on stocks that will benefit from long-term consumer trends and have also been beaten up by recession fears.
The poster child for this is Bank of America (BAC). I’ve been ranting about BofA for quite a while. But I am going to continue to pound the table about its valuation and its future potential.
So I ask: Will deposits continue to grow at BofA? Has the bank cut its risk profile? Is the dividend too low?
Will BofA be positioned to benefit from a growing US population and increased demand for housing? Will the bank make more money as interest rates normalize?
The answer to all of these questions is an emphatic "Yes."
The last time I reviewed Bank of America, I told investors to keep the stock on their radar, but also noted that there was probably no need to run out and buy it immediately.
Well, I don't feel that way anymore. I think you should buy it—or add to your position—right away.
I get the sense that the market’s fears concerning Federal Reserve action and the possibility of a recession has just about run its course.
And that means Bank of America is close to making a solid 30-40% run higher. So buy it now, right out of the gate. It's the right thing to do.
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