In a research note to clients this week, Bank of America analysts highlighted sectors that, according to their model, investors should pick through 2026.
The bank recommended that investors prioritize the Healthcare and Real Estate sectors, arguing that both sectors currently look attractive based on value and momentum metrics.
BofA writes that its "Momentum and Value" model "now places Healthcare #1 and Real Estate #3 – and we are overweight both sectors... for investors with a medium-term (~12-month) time horizon."
The bank adds that it maintains a neutral stance on the Technology sector, which is ranked second this month.
The attractiveness of the Healthcare and Real Estate sectors is said to be partly due to valuation support. The note states that these two sectors are "inexpensive relative to historical market multiples."
But the bank emphasizes that cheapness alone isn't the only factor. It highlights "positive revision trends relative to the broader market, plus a three-month period of outperformance," which together "point to good value."
In contrast, BofA is more cautious about the FMCG sector, despite overweighting it in its strategy work.
BofA warns that this sector is "less likely to appreciate in the near term" as it currently "looks like a 'value trap'—cheap only because its relative price has fallen faster than analysts have cut earnings estimates."
