Bank of America Picks 10 Stocks Likely to Make Big Moves Over the Next 3 Months

It's a new year and that means time for some serious stock picking. Analysts at Bank of America Merrill Lynch, the investment banking arm of Bank of America, named 10 companies that "could have the most significant market and business related catalysts over the next three months," in a note to clients on Monday.

Industry: Materials/Fertilizers & Agricultural Chemicals
Market Cap: $9.5 billion
2015 return: -25.1%

BofA Rating/Price Objective: Buy/$65
BofA Said: CF's shares are down sharply in the last few months, in line with spot nitrogen prices, and reflecting possible market concerns whether the company will be able to complete its proposed acquisition of Netherlands-based OCI and subsequent tax inversion. We view the weakness in nitrogen prices as temporary and unsustainable, with a likely recovery in the next couple months. Also, if it were to be completed, we think the OCI acquisition could present significant operating leverage, synergy, and upside to earnings. Our $65 PO represents a 13x multiple of our pro-forma 2017 EPS estimate of $5.
Potential Catalysts: expecting near-term rebound in nitrogen fertilizer prices; SEC approval of S-4 could increase expectations of OCI merger

Highlights from the analysis by TheStreet Ratings Team goes as follows:
◾The revenue growth came in higher than the industry average of 18.1%. Since the same quarter one year prior, revenues slightly increased by 0.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
◾CF INDUSTRIES HOLDINGS INC's earnings per share declined by 25.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CF INDUSTRIES HOLDINGS INC increased its bottom line by earning $5.29 versus $4.93 in the prior year. For the next year, the market is expecting a contraction of 25.8% in earnings ($3.92 versus $5.29).
◾Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Chemicals industry and the overall market on the basis of return on equity, CF INDUSTRIES HOLDINGS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
◾The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Chemicals industry average. The net income has significantly decreased by 30.6% when compared to the same quarter one year ago, falling from $130.90 million to $90.90 million.
◾The debt-to-equity ratio of 1.36 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, CF maintains a poor quick ratio of 0.96, which illustrates the inability to avoid short-term cash problems.

Industry: Financial Services/Regional Banks
Market Cap: $13.7 billion
2015 return: 5.4%

BofA Rating/Price Objective: Buy/$30
BofA Said: CFG continues to execute on its turnaround story, in our view. An improving return profile combined with significant capital return should drive a re-rating for the stock. Improving returns should benefit from prudent expense management and above average loan growth. We forecast that these combined with a boost to its lending margin from higher short term interest rates should drive an acceleration in YoY EPS growth in 2016.
Potential Catalysts: 2016 guidance should boost investor confidence around improving profitability; expense discipline key

TheStreet Said: Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

Highlights from the analysis by TheStreet Ratings Team goes as follows:
◾CFG's revenue growth has slightly outpaced the industry average of 1.4%. Since the same quarter one year prior, revenues slightly increased by 5.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
◾Compared to where it was trading a year ago, CFG's share price has not changed very much due to (a) the relatively weak year-over-year performance of the overall market, (b) the company's stagnant earnings, and (c) other mixed results.
◾When compared to other companies in the Commercial Banks industry and the overall market, CITIZENS FINANCIAL GROUP INC's return on equity is below that of both the industry average and the S&P 500.
◾The gross profit margin for CITIZENS FINANCIAL GROUP INC is currently very high, coming in at 85.38%. Regardless of CFG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CFG's net profit margin of 16.57% is significantly lower than the industry average.

Industry: Financial Services/Real Estate Investment Trust
Market Cap: $2.8 billion
2015 return (since April 20): -37.7%

BofA Rating/Price Objective: Buy/$34
BofA Said: Communications Sales & Leasing (CSAL) currently has a dividend yield of 12.8% vs triple net REIT peers at 6.4% and trades at 7.2x '16 AFFO vs peers at 12.3x. We believe many investors are currently treating CSAL as a bond, yet the company has growth initiatives through its deal pipeline and has revenue escalators with its current contract with Windstream. We believe that as the company is able to complete new deals, diversify away from its anchor tenant, and its anchor tenant continues to de-lever, that the discount assigned to CSAL should fall, the dividend should grow, the yield would shrink and the stock should rise.
Potential Catalysts: CSAL completing its first deal; high yield bond market relief, tenant financial improvement

Highlights from the analysis by TheStreet Ratings Team goes as follows:
◾JACK's revenue growth has slightly outpaced the industry average of 1.1%. Since the same quarter one year prior, revenues slightly increased by 2.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
◾JACK IN THE BOX INC has improved earnings per share by 47.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, JACK IN THE BOX INC increased its bottom line by earning $2.95 versus $2.26 in the prior year. This year, the market expects an improvement in earnings ($3.64 versus $2.95).
◾Net operating cash flow has decreased to $61.73 million or 29.12% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
◾The debt-to-equity ratio is very high at 44.84 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.29, which clearly demonstrates the inability to cover short-term cash needs.

Industry: Consumer Goods & Services/Restaurants
Market Cap: $2.7 billion
2015 return: -4.1%

BofA Rating/Price Objective: Buy/$95
BofA Said: JACK shares have been under pressure in recent months driven by investor concerns about difficult same store sales comparisons for the flagship Jack in the Box (JIB) brand as well as JACK's Mexican quick casual Qdoba brand. We expect JACK to comp low single digit positive at both brands in its 16-week 1Q allaying investor fears of negative comps. Brand/corporate news should pick up around JIB's extensive Super Bowl menu upgrade and continue with investor focus potentially shifting to JACK's late May investor meeting that is expected to include brand strategies, Qdoba's expansion plans and place within JACK, capital structure, G&A, and franchise mix. This is JACK's first investor meeting in four years and the first with Lenny Comma as CEO.
Potential Catalysts: we expect a reassuring 1Q earnings report in mid-February; investor focus should shift to potential news at late May meeting

TheStreet Said: Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
.

KNC Price: Industry: Consumer Non-Discretionary/Packaged Foods
Market Cap: $89.3 billion
2015 return (since July 6): -0.27%

BofA Rating/Price Objective: Buy/$85
BofA Said: Since merging in July 2015, [Kraft Heinz] (KHC) has revealed glimpses of the most recent iteration of the 3G operating model for the packaged food industry which in our view holds more reverence for growing revenues while reducing costs. We expect to see more of this revealed in 1Q16 which should give investors more confidence in the significant earnings potential at KHC over the next 3 years.
Potential Catalysts: impact from productivity should become more evident; revenue management, source of upside

NXP Semiconductors:

Industry: Technology/Semiconductors
Market Cap: $21.4 billion
2015 return: 10.3%

BofA Rating/Price Objective: Buy/$105
BofA Said: NXPI is trading at a significant discount to peers at just 11x PE on our $8+ pro-forma earnings power in a rapidly consolidating industry. Despite weaker near-term trends in Q4 (inventory issues), we think the expectations bar has been reset heading into the first quarter following the merger with Freescale. We think recent near-term headwinds could abate and lead to a positive earnings surprise in Q4/Q1. Additionally, a lower exposure to mobile (incl. Apple) and higher exposure to longer cycle auto/industrial should improve sentiment and trading multiples. Lastly, new product announcements at CES in Jan could solidify investor views on NXP's leadership in auto/security markets.
Potential Catalysts: first quarter post-merger close with Freescale; focus on cost synergies/balance sheet improvements and long-term forecasts

TheStreet Said: Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate NXP SEMICONDUCTORS NV (NXPI) as a Buy with a ratings score of B. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the analysis by TheStreet Ratings Team goes as follows:
◾NXPI's revenue growth has slightly outpaced the industry average of 9.1%. Since the same quarter one year prior, revenues slightly increased by 0.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
◾NXP SEMICONDUCTORS NV reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, NXP SEMICONDUCTORS NV increased its bottom line by earning $2.17 versus $1.34 in the prior year. This year, the market expects an improvement in earnings ($5.43 versus $2.17).
◾The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 198.3% when compared to the same quarter one year prior, rising from $121.00 million to $361.00 million.
◾The gross profit margin for NXP SEMICONDUCTORS NV is rather high; currently it is at 54.99%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.71% is above that of the industry average.
◾Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.