Bank of America has identified three stocks it believes investors should consider buying ahead of their third-quarter earnings reports: BWX Technologies, DraftKings, and Grocery Outlet Holdings. Each name is backed by a distinct investment thesis, ranging from nuclear energy demand to a reassessment of competitive threats in sports betting and a retail turnaround story.
BWX Technologies: Nuclear demand fuels optimism
BWX Technologies, a provider of nuclear components, has seen its shares decline roughly 17% in 2026, yet Bank of America analyst Ronald Epstein maintains a Buy rating following the company's investor day. Epstein notes that BWXT's financial profile has improved significantly since the last investor day, with key metrics strengthening and management gaining greater operational flexibility.
The bank highlights broad-based demand drivers, including the overall growth of nuclear energy, the intersection of energy, economic, and national security interests, and long-term opportunities in AI and defense fuels. Epstein argues that BWXT remains a compelling buy heading into its quarterly results, which are scheduled for early November. Consensus estimates project earnings of $1.19 per share, representing roughly 19% year-over-year growth.
DraftKings: Upgrade on prediction markets
After about a year on the sidelines, Bank of America has upgraded DraftKings to Buy from Hold. Analyst Julie Hoover had previously held back due to concerns that prediction markets could complicate the sports betting company's outlook and expose estimates to material risk. Now, she views prediction markets as a "win-win," seeing less risk of cannibalization and believing that Street estimates are bottoming.
DraftKings shares have dropped 47% over the past year and 44% in 2026, a pullback Hoover describes as an attractive entry point. Her thesis combines a reassessment of the competitive landscape with a significantly lower starting valuation, and the bank points to several positive catalysts on the horizon. DraftKings is set to report earnings later this month, with consensus expecting a loss of $0.23 per share, a 44% improvement from the prior year.
Grocery Outlet: EPS rebound and e-commerce alignment
Grocery Outlet Holdings is the only one of the three stocks trading higher this year, up 18%. Analyst Robert Ohmes upgraded the shares to Buy from Neutral, citing an "EPS rebound" driven by cheaper opportunistic merchandise that is lifting traffic and basket size. Additionally, e-commerce prices now match those on DoorDash, Uber Eats, and Instacart, which Ohmes believes improves the risk-reward profile even after the stock's gains.
Ohmes says the shares are too attractive to ignore, and the bank is impressed by management's execution, aided by new leadership in store operations, supply chain, and marketing. Grocery Outlet is scheduled to report on October 21, with consensus expecting earnings of $0.11 per share, a 47% decline year-over-year.
All three companies report within weeks, and Bank of America's analysts argue that shifting expectations or operational changes already favor buyers. The recommendations come as broader markets face key tests from bank earnings and inflation data, which could influence investor sentiment across sectors.
This article is for informational purposes only and does not constitute financial advice.
