Bank of America's "Triple Momentum" Model Highlights Outperformers: Gold, Defense, Nuclear, and Rare Earth Sectors Lead Global Markets While Investors Remain Underweight in Quantum and AI Stocks

Stock News11-29

Bank of America's "triple momentum" analysis reveals that gold (GLD), defense (ITA, XAR), nuclear energy (NLR, NUKZ), and rare earth sectors have outperformed all major global industry segments. This comprehensive indicator, which integrates earnings, price, and news momentum, shows that active long-only funds maintain near-benchmark weightings in these sectors. The evaluation system combines these momentum characteristics, individual stock rankings, investor positioning, and valuation trends to provide a holistic view of current market sentiment.

Bank of America notes that this approach aims to assess "how much expectation is already priced in" for each sector, guiding investors to identify potential opportunities within these high-performing thematic investments.

**Top Stocks Across Themes** Quantitative strategists at Bank of America have identified leading stocks within each investment theme. In the U.S. market, Celestica (CLS.US), Seagate Technology (STX.US), Western Digital (WDC.US), Lumentum Holdings (LITE.US), and Amkor Technology (AMKR.US) rank highest in AI under the "triple momentum" framework.

For the defense sector, top performers include IonQ (IONQ.US), V2X (VVX.US), General Dynamics (GD.US), BWX Technologies (BWXT.US), and Leidos (LDOS.US). In gold, New Gold (NGD.US), Equinox Gold (EQX.US), IAMGOLD Corp. (IAG.US), Barrick Gold (B.US), and Dundee Precious Metals (DPMLF.US) lead the rankings.

Nuclear energy's top stocks are Talen Energy (TLN.US) and BWX Technologies (BWXT.US). In quantum computing, Quantum Computing Inc. (QUBT.US), IonQ, and Nvidia (NVDA.US) dominate, while MP Materials (MP.US) stands out in the rare earth sector.

**Positioning and Valuation Insights** Investor positioning data reveals a notable trend—despite strong momentum in quantum and AI sectors, investors remain significantly underweight. Bank of America strategists attribute this to "the difficulty of overweighting mega-cap constituents," though they note active buying across all themes, with quantum computing ETF (QTUM) seeing the most substantial inflows over the past year.

Nigel Tupper, Bank of America’s Global Chief Quantitative Strategist, highlights significant valuation disparities across sectors, which may influence future performance. "The rare earth sector has the highest forward P/E ratio, while gold has the lowest," providing a reference for relative valuations. Additionally, "quantum computing shows the highest price-to-book ratio, whereas nuclear energy has the lowest," reflecting varying risk-return profiles among these investment themes.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment