From artificial intelligence to the high-end residential market, Bank of America’s latest investment list covers multiple hot sectors. NVIDIA is expected to maintain its leadership with its full-stack AI advantages, Citigroup is seen as poised to realize the fruits of its transformation, and Toll Brothers has delivered an outperformance in a sluggish housing market.
In June, Bank of America maintained its positive outlook on several stocks and added Apple (AAPL.O), NVIDIA (NVDA.O), Citigroup (C.N), Toll Brothers (TOL.N), Dollar General (DG.N), and National Vision Holdings (EYE.O) to its list of top recommendations.
The row believes that, despite recent pressure on some individual stocks, the relevant companies still have upside potential based on fundamentals, valuation, and future catalysts.
In the technology sector, Bank of America is most bullish on NVIDIA and Apple.
For NVIDIA, Bank of America believes the company possesses an unmatched, end-to-end capability and industry-leading advantages in AI chips, hardware, and software. Meanwhile, its strong balance sheet and robust free cash flow enable it to continuously expand investments in its ecosystem and increase returns to shareholders.
Apple also maintains a "Buy" rating. Bank of America expects that as generative AI features become more widespread, users will need to upgrade their hardware to fully experience them, driving a new iPhone replacement cycle in fiscal years 2025 and 2026.
Additionally, accelerated growth in service revenue, improved profit margins due to a higher proportion of self-developed chips, ongoing share repurchases and dividends, and the appeal of AI features to institutional investors’ allocation needs are all considered key positive factors. Bank of America also believes that Apple’s overall legal risks remain within manageable limits.
In the financial sector, Citigroup remains one of the most favored bank stocks among U.S. banks.
At a previously held Investor Day event, Citigroup announced that it had received approval for a $30 billion stock buyback program. Although the company’s stock has risen 67% over the past year, the team led by Bank of America analyst Ebrahim Poonawala believes the stock price has not yet fully reflected its transformation achievements.
Analysts noted that management has demonstrated high consistency and synergy in strategic execution, with the overall team's execution capability significantly strengthened. Purnawirawan raised Citigroup's 12-month price target from $150 to $170, stating that it may still be too early to declare the transformation fully successful, but investors can expect to gradually see the potential unlocked by the financial institution following its internal restructuring.
Artificial intelligence is also a key strategic focus for Citigroup. Bank of America noted that Citigroup is actively collaborating with industry leaders such as Anthropic and Google (GOOGL.O) to integrate AI technology more deeply into its business operations.
In the consumer and retail sector, Bank of America is equally bullish on Dollar General and National Vision Holdings.
Analyst Robert Ohmes believes that Dollar General still has strong growth momentum. The company is actively advancing store renovations and the development of new store formats, while also partnering with Uber (UBER.N) and Instacart (CART.O) to expand its delivery services. Additionally, initiatives such as SKU optimization are expected to further improve gross margin performance.
Despite Dollarama's stock having declined for three consecutive months and falling 17% year-to-date in 2025, Bank of America believes its current P/E ratio of approximately 13.5 remains attractively valued.
For eyewear retailer National Vision Holdings, Bank of America recommends investors buy the dip following the stock’s pullback. The company experienced significant selling pressure after its first-quarter earnings report, with its stock declining 29% in May and its valuation falling to approximately 7 times its 2027 expected EV/EBITDA, near historical lows.
Bank of America believes that factors driving its valuation recovery include its premium product strategy, tiered store operation model, and sustained increases in average transaction value driven by Meta Platforms' (META.O) AI-powered smart glasses.
In the real estate sector, Bank of America continues to list Toll Brothers, a homebuilder, as its top pick.
Analyst Rafe Jadrosich said the company achieved a "rare beat and raise" in its latest fiscal quarter, making it especially notable amid today's challenging macroeconomic environment.
Data shows that Toll Brothers' gross margin for the second fiscal quarter reached 26.2%, exceeding market expectations. Bank of America believes this indicates the company's profit margins remain healthy and resilient. Although changes in product mix may exert some pressure on the third fiscal quarter, an improvement is expected in the fourth quarter.
Jadrosic noted that demand for high-end residential properties remains robust, and the company has advantages in regional positioning and target customer segmentation, along with strong capital return capabilities and relatively attractive valuation levels, thus maintaining a "Buy" rating.
Notably, Toll Brothers' stock has declined by approximately 12% over the past three months, offering relatively more attractive entry opportunities for investors bullish on its long-term fundamentals.