As September begins, Bank of America's equity research team has identified three stocks it believes are positioned for meaningful gains. The selections cut across sectors—semiconductor equipment, live entertainment, and consumer products—but share a common thread: each company has a specific catalyst that the market has yet to fully price in.
ASML: A top pick in semis
Analyst Didier Scemama has named ASML (ASML) his top pick in the semiconductor equipment space, viewing the recent pullback as a buying opportunity rather than a red flag. While ASML shares have trended higher this year, they have lagged some peers over the past 12 months—a gap Scemama attributes to an unjustified de-rating given the company's competitive moat and earnings trajectory.
Bank of America's estimates sit above consensus, with a price target of €2,452, built on expectations of best-in-class EPS growth and expanding operating margins. The firm acknowledges risks from capacity constraints and rising competition but sees the risk-reward as compelling heading into the second half.
Madison Square Garden Entertainment: Operating leverage story
Peter Henderson's bullish case for Madison Square Garden Entertainment (MSGS) rests on the company's forward bookings, which remain robust, feeding an operating-leverage story that should continue to widen margins and lift adjusted operating income. Last quarter's results were boosted by high concert volume, richer per-show economics, and a lift from the Knicks' playoff run, with sponsorship and suite revenue adding support.
Shares of the parent of the Knicks and Rangers have already surged 45% this year, but Henderson believes the stock has more room to run. The company's ability to monetize its venues and events is seen as a durable competitive advantage.
Church & Dwight: Turnaround gaining traction
Anna Lizzul calls Church & Dwight (CHD) one of BofA's top ideas, centered on a management-led turnaround that is already underway. The maker of Arm & Hammer and other household brands is recalibrating its portfolio between value and premium price points. Lizzul expects innovation across its core power brands, combined with deliberate portfolio reshaping, to push gross margins to record levels.
The thesis leans on the company's track record of resilience when consumer spending softens—a trait that should continue to compound. Shares are up roughly 21% year-to-date, and further execution on margin targets is seen sustaining outperformance. CHD also pays a dividend yield of 1.21%, adding to its appeal for long-term investors.
These picks come as markets navigate a mix of economic data and policy signals. For context, recent inflation warnings have boosted September rate hike odds, and chip stocks have seen some profit-taking. BofA's selections are company-specific, but they also reflect a broader search for value in a market that has been driven by a few large tech names.
Investors should note that BofA's price targets and estimates are based on their own models and may differ from consensus. As always, individual circumstances and risk tolerance should guide investment decisions.
This article is for informational purposes only and does not constitute financial advice.
